UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 20-F

 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
                                  ACT OF 1934
                  For the fiscal year ended December 31, 2003
                        Commission file number: 1-15194
                    COMPANHIA DE BEBIDAS DAS AMERICAS-AMBEV
            (Exact name of Registrant as specified in its charter)

<TABLE>
<CAPTION>

 <S>                                                <C>
         American Beverage Company-AmBev                    Federative Republic of Brazil
 (Translation of Registrant's name into English)   (Jurisdiction of incorporation or organization)
                         _____________________________
                Rua Dr Renato Paes de Barros 1017, 4o. andar
                        04530-001 Sao Paulo, SP, Brazil
                   (Address of principal executive offices)
                         _____________________________
 Securities registered or to be registered pursuant to Section 12(b) of the Act:
</TABLE>


                                                         NAME OF EACH EXCHANGE
                    TITLE OF EACH CLASS                    ON WHICH REGISTERED

         American Depositary Shares,                    New York Stock Exchange
         evidenced by American Depositary
         Receipts, each representing
         100 Common Shares

         Common Shares, no par value*

         American Depositary Shares,                    New York Stock Exchange
         evidenced by American Depositary
         Receipts, each representing 100 Preferred
         Shares
         Preferred Shares, no par value*

__________________

*    Not for trading but only in connection with the registration of the
     American Depositary Shares, pursuant to the requirements of the
     Securities and Exchange Commission.

 Securities for which there is a reporting obligation pursuant to Section
 15(d) of the Act:


                                                         Name of each exchange
               Title of each class                       on which registered

    $500,000,000 10 1/2% Notes due December 2011 of      Not Applicable
    Companhia Brasileira de Bebidas guaranteed by
    Companhia de Bebidas das Americas - AmBev

    Guaranty of the $500,000,000 10 1/2% Notes due       Not Applicable
    December 2011 by Companhia de Bebidas das
    Americas - AmBev


<PAGE>


   The number of total outstanding shares of each of the issuer's classes of
                capital or common stock as of May 31, 2004 was:
                         15,631,332,792 Common Shares
                        21,732,192,808 Preferred Shares

    Indicate by checkmark whether the registrant (1) has filed all reports
 required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
   1934 during the preceding 12 months (or for such shorter period that the
  registrant was required to file such reports), and (2) has been subject to
                such filing requirements for the past 90 days.

                       Yes {X} No { } Not Applicable { }
 Indicate by check mark which financial statement item the registrant
 has elected to follow.

                            Item 17 { } Item 18 {X}


<PAGE>



                               TABLE OF CONTENTS

                                                                          PAGE


INTRODUCTION..................................................................i

BACKGROUND ON THE COMPANY.....................................................i

ACCOUNTING PERIODS AND PRINCIPLES............................................iv

CURRENCY TRANSLATION..........................................................v

INDUSTRY DATA................................................................vi

TRADEMARKS...................................................................vi

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION...................vi

Item 1.    Identity of Directors, Senior Management and Advisers..............1

Item 2.    Offer Statistics and Expected Timetable............................1

Item 3.    Key Information....................................................1

Item 4.    Information on the Company.........................................27

Item 5.    Operating and Financial Review and Prospects.......................71

Item 6.    Directors, Senior Management and Employees........................111

Item 7.    Major Shareholders and Related Party Transactions.................124

Item 8.    Financial Information.............................................133

Item 9.    The Offer and Listing.............................................141

Item 10.   Additional Information............................................149

Item 11.   Quantitative and Qualitative Disclosures About Market Risk........175

Item 12.   Description of Securities Other than Equity Securities............186

Item 13.   Defaults, Dividend Arrearages and Delinquencies...................186

Item 14.   Material Modifications to the Rights of Security Holders
           and Use of Proceeds...............................................186

Item 15.   Disclosure Controls and Procedures................................186

Item 16.   Reserved..........................................................186

Item 17.   Financial Statements..............................................186

Item 18.   Financial Statements..............................................186

Item 19.   Exhibits and Certifications.......................................187

Signatures ..................................................................192

<PAGE>


                                 INTRODUCTION

     This annual report on Form 20-F relates to the two classes of registered
American Depositary Shares (ADSs) of Companhia de Bebidas das Americas - AmBev
evidenced by American Depositary Receipts (ADRs) representing 100 preferred
shares of AmBev and ADSs evidenced by ADRs representing 100 common shares of
AmBev and the U.S.$500,000,000 10 1/2% notes due 2011 of Companhia Brasileira
de Bebidas (CBB) guaranteed by AmBev (the notes).

     In this annual report, except as otherwise indicated or as the context
otherwise requires, the "Company", "AmBev", "we", "us" and "our" refers to
Companhia de Bebidas das Americas - AmBev and its subsidiaries.


                           BACKGROUND ON THE COMPANY

HISTORY AND DEVELOPMENT OF THE COMPANY

     Companhia de Bebidas das Americas - AmBev was incorporated as Aditus
Participacoes S.A. (Aditus) on September 14, 1998. AmBev is a publicly held
corporation, incorporated under the laws of the Federative Republic of Brazil.
Prior to July 1, 1999, it had no operations. On July 1, 1999, the controlling
shareholders of Companhia Cervejaria Brahma (Brahma) and Companhia Antarctica
Paulista Industria Brasileira de Bebidas e Conexos (Antarctica), both
Brazilian corporations, contributed all of their common and preferred shares
in Brahma and Antarctica in exchange for shares of the same type and class of
AmBev (the controlling shareholders' contribution). AmBev's principal
executive offices are located at Rua Dr. Renato Paes de Barros, 1017, 4th
floor, CEP 04530-001, Sao Paulo, SP, Brazil, Tel.: (55-11) 2122-1200, e-mail:
ir@ambev.com.br.

     AmBev is the successor of Brahma. Brahma was founded in 1888 as Villiger
& Cia., and was one of the oldest brewers in Brazil. The Brahma brand was
registered on September 6, 1888, and in 1904 Villiger & Cia. changed its name
to Companhia Cervejaria Brahma.

     On March 31, 2001, Brahma was merged into Antarctica, and Antarctica
changed its name to Companhia Brasileira de Bebidas. This transaction had no
effect on AmBev's financial statements as each of the entities was
wholly-owned by AmBev. The transaction permitted AmBev to optimize the future
use of tax loss carry forwards.

     AmBev and CBB are both Brazilian sociedades anonimas.

THE COMBINATION

     AmBev was formed through the combination of Brazil's two largest beverage
companies, Brahma and Antarctica (the combination). The combination involved
the formation of AmBev, as a holding company for Brahma and Antarctica. The
combination was effected over the course of 1999 and 2000, beginning with the
contribution of shares of the controlling shareholders of Brahma and
Antarctica in exchange for shares of AmBev on July 1, 1999, and followed by
the consummation of transactions by which Antarctica and Brahma became
wholly-owned subsidiaries of AmBev on September 15, 1999 and September 14,
2000, respectively, and the public shareholders of Brahma and Antarctica
became shareholders of AmBev.

     Pursuant to the controlling shareholders' contribution on July 1, 1999,
Brahma's controlling shareholders, Empresa de Administracao e Participacoes
S.A. - ECAP (ECAP) and Braco S.A. (Braco), and Antarctica's controlling
shareholder, Fundacao Antonio e Helena Zerrenner Instituicao Nacional de

                                     -i-

<PAGE>


Beneficencia (FAHZ), contributed all of their common and preferred shares in
Brahma and Antarctica in exchange for AmBev shares of the same type and class.

          On July 1, 1999, the FAHZ, Braco, and ECAP, the controlling
shareholders of AmBev, as well as AmBev and Marcel Telles, Jorge Paulo Lemann
and Carlos Alberto Sicupira, entered into a shareholders' agreement that
contains provisions relating to the voting of shares of AmBev and the voting
by AmBev of the shares of its subsidiaries. Messrs. Telles, Lemann and
Sicupira are indirectly the controlling shareholders of Braco Investimentos
S.A., which holds all of the AmBev shares previously held by Braco S.A. and has
succeeded to Braco S.A.'s rights and obligations under the AmBev shareholders'
agreements. Braco Investimentos S.A. owns 99.74% of the voting shares of ECAP.
For a detailed description of the AmBev shareholders' agreement, see "Major
Shareholders and Related Party Transactions--Major Shareholders--AmBev
Shareholders' Agreement".

     On March 31, 2001, Brahma was merged into Antarctica, and Antarctica
changed its name to Companhia Brasileira de Bebidas. This transaction had no
effect on AmBev's consolidated financial statements because each of the
entities was wholly-owned by AmBev. CBB is AmBev's principal operating
subsidiary.

BRAZILIAN ANTITRUST APPROVAL

     Brazilian antitrust authorities have the power to investigate any
transaction that results in the concentration of a market share equal to or
greater than 20% of any relevant market or which involves, among other
factors, any company with annual gross sales of R$400 million or more. The
transfer of control of Brahma and Antarctica to AmBev through the controlling
shareholders' contribution resulted in a market share for AmBev in excess of
70% of the Brazilian beer market and 20% of the Brazilian soft drinks market.
Brazilian antitrust authorities therefore reviewed the transaction to
determine whether it would negatively impact competitive conditions in the
relevant markets, or whether it would negatively affect consumers.

     The Conselho Administrativo de Defesa Economica (CADE), an independent
agency of the Brazilian Ministry of Justice, is the principal Brazilian
antitrust authority. On July 14, 1999, CADE issued an interim order in
connection with the controlling shareholders' contribution that placed
temporary limits on the actions of Brahma and Antarctica relating to their
integration. On April 7, 2000, CADE approved the controlling shareholders'
contribution subject to restrictions designed to prevent AmBev from exercising
excessive control over the Brazilian beer market. CADE imposed no restrictions
in connection with soft drinks or other beverages produced by AmBev. On April
19, 2000, AmBev entered into a performance agreement with CADE pursuant to
which AmBev agreed to comply with the restrictions imposed by CADE. The
principal terms of the performance agreement include:

     o    For a period of four years, we must share our distribution network
          with at least one regional Brazilian beer company, which cannot have
          a market share in excess of 5% of its respective regional market, in
          each of the five regions of Brazil as defined by CADE. This
          obligation is independent of our obligation to share our
          distribution network with the purchaser of Bavaria for a certain
          specified period of time (see below). We had to choose the companies
          through a public bidding process and had to select those that
          offered to pay us the highest distribution commissions. On September
          10, 2001, after a public bidding process, we signed an agreement
          with Eduardo Bier Comercial de Produtos Alimenticios (Dado Bier),
          for the sharing of our distribution network;

     o    For a period of four years, if we decide to close or dispose of any
          of our beer plants, we must first offer such plant for sale in a
          public auction;

     o    For a period of five years, if we or any of our subsidiaries
          dismisses any employee as a result of the restructuring process
          relating to the combination and other than for cause, we



                                      -ii-
<PAGE>



          must attempt to place the employee in a new job, and provide the
          employee with retraining, as appropriate;

     o    We and our distributors cannot demand that points of sale operate on
          an exclusive basis, except where our investments and improvements
          are equivalent to a majority of the assets of the point of sale or
          such exclusivity is, in the opinion of the management of the point
          of sale, in their interest; and

     o    A requirement that we sell Antarctica's Bavaria brand and related
          assets. The principal requirements of the Bavaria sale, which have
          been completed, were as follows:

          (a)  the transfer, to a single purchaser holding no more than 5% of
               the Brazilian beer market, of the Bavaria brand (including the
               Bavaria Pilsen and Bavaria Premium brands) and five beer
               plants;

          (b)  the sharing of our distribution network with the purchaser for
               a period of six years, renewable for an additional two-year
               period at the option of the purchaser. During the initial
               four-year period, the purchaser will not have to pay any
               commission for the use of our network, although it will have to
               pay costs associated with freight and distributors'
               commissions; and

          (c)  the maintenance prior to sale of specified minimum levels of
               publicity and marketing expenditures relating to the Bavaria
               brand, and the use of reasonable efforts to keep Bavaria's
               market share at a minimum of 4.7% of the Brazilian beer market.

     On November 6, 2000, we entered into an agreement with Molson Inc. for
the sale of Bavaria pursuant to the terms of our performance agreement with
CADE. Our agreement with Molson provided for an initial purchase price of
R$416.1 million, of which R$191.4 million was received at that time. The
remaining R$224.7 million was to be payable to us by Molson subject to the
Bavaria brand reaching certain market thresholds. Molson agreed to pay an
additional R$44.8 million for each 0.5% increase in market share achieved by
the Bavaria brand on a yearly basis during a five-year period, up to a maximum
additional payment of R$224.7 million. At the time of sale, Molson agreed to
purchase Bavaria at its then-current 4% market share. A minimum market share
of 6.5%, in addition to intermediary targets, must be attained by 2005 to
assure receipt of the full contingent price of R$ 224.7 million. Because the
targets have not been met, we have not recorded in our financial statements
any portion of this additional consideration. CADE approved this agreement on
December 13, 2000, and the sale was completed on December 20, 2000. Our
affiliate Miranda Correa, which owned one of the plants sold to Molson,
received 5.8% of the proceeds from the sale of the Bavaria brand.

     Non-compliance with any obligation under the performance agreement during
its five year term will trigger a minimum daily fine of R$5,320 per
occurrence. This daily fine can be increased up to a maximum of R$106,410 per
occurrence and may be assessed until such time as we comply with the specific
obligation. In the event of non-compliance, CADE may also appoint a judicial
officer to enforce compliance. CADE has the authority to revoke its approval
of the controlling shareholders' contribution and to file an administrative
proceeding against us if we do not comply with our obligations. CADE also has
the general authority to order other remedial measures as provided by law and
as established under the performance agreement.

     On April 30, 2002, Molson decided to terminate early the distribution
agreement signed at the time of the sale according to the CADE requirements
under the performance agreement in order to enter into a distribution
agreement with The Coca-Cola Company.



                                    -iii-


<PAGE>

     As of December 31, 2002 AmBev had transferred all assets and operations
related to the Bavaria brand to Molson, which included the production and
ended the distribution of the Bavaria brand in Brazil.

ACCOUNTING ASPECTS OF THE COMBINATION

     For information on certain accounting aspects of the combination, see
"Operating and Financial Review and Prospects--Accounting Aspects of the
Combination".

ACQUISITION OF INTEREST IN QUINSA

     On January 31, 2003, AmBev consummated its agreements to acquire an
interest in Quilmes Industrial (Quinsa), Societe Anonyme, the largest
Argentine brewer, and in Quilmes International (Bermuda) Ltd. (QIB), Quinsa's
controlled subsidiary. This transaction involved an initial acquisition of
40.475% of the economic interest in Quinsa. See "Information on the
Company--Acquisition of Interest in Quinsa". The purchase consideration of
R$1,717.6 million consisted of a cash payment of R$1,427.9 million and the
contribution of AmBev's brewery assets located in Argentina, Uruguay and
Paraguay with a book value (determined under accounting practices generally
accepted in Brazil) of R$289.7 million. This acquisition granted AmBev further
access to the Argentine, Bolivian, Uruguayan and Paraguayan markets in which
Quilmes commands a dominant share, as well as to Quinsa's operations in Chile.
AmBev will also be able to distribute the Quilmes brands throughout Brazil. A
put and call option agreement is in place which may result in AmBev acquiring
an additional 373.5 million Class A shares of Quinsa if Beverage Associates
(BAC) Corp. exercises its put option, or thereafter if we exercise our call
option, in either case in exchange for stock of AmBev. The put option granted
to BAC becomes immediately exercisable in the event of a change of control of
AmBev occurring prior to January 31, 2006, and will be deemed exercised in the
event of a change of control of AmBev occurring after that date. Accordingly,
BAC may seek to exercise the put option in connection with the consummation of
the Interbrew-AmBev Transactions.

     The acquisition of our interest in Quinsa was also subject to the
approval of Brazilian and Argentine antitrust authorities. For more details of
the transaction, the Quilmes business and the antitrust restrictions, see
"Information on the Company--Acquisition of Interest in Quinsa".

     The accounting effects of the acquisition of our interest in Quinsa were
recognized in our financial statements for the first quarter of 2003, which
were filed with the Brazilian Securities Commission (CVM) on May 9, 2003. See
"Operating and Financial Review and Prospects--Accounting aspects of the
Acquisition of Interest in Quinsa" and "Operating and Financial Review and
Prospects--Future Impact of Quinsa".

INTERBREW-AMBEV TRANSACTIONS

     Summary
     -------

     On March 3, 2004, AmBev entered into an agreement to acquire Labatt
Brewing Company Limited (Labatt), a company organized under the laws of
Canada, from the Belgian brewer Interbrew S.A./N.V. (Interbrew). Labatt is one
of Canada's leading brewers, with a market share in Canada of approximately
43% on volumes of approximately 11.5 million hectoliters in 2003. Labatt's
brand portfolio in Canada includes Labatt Blue[R], Kokanee[R], Keith's[R] and,
under license, Labatt brews and distributes Budweiser. In exchange for Labatt,
AmBev will issue to Interbrew approximately 7.9 billion new AmBev common
shares and 11.4 billion new AmBev preferred shares.

     Also on March 3, 2004 various entities controlled by AmBev's current
controlling shareholders, Messrs. Lemann, Telles and Sicupira, entered into an
agreement with Interbrew and Interbrew's controlling shareholders to exchange
their controlling interest in AmBev (consisting of approximately 8.25 billion
AmBev common shares) for 141,712,000 newly-issued ordinary shares of
Interbrew.

     The transactions contemplated by these agreements, which we refer to
collectively as the "Interbrew-AmBev Transactions", are subject to various
conditions, and the closings of both transactions are contingent upon one
another. Upon consummation of the Interbrew-AmBev Transactions:

          o    Labatt will become a wholly owned subsidiary of AmBev;

          o    Based on current expectations, Interbrew will acquire a total
               of approximately 16.2 billion AmBev common shares and 11.4
               billion AmBev preferred shares, representing an approximately
               69% voting interest and 48% economic interest in AmBev as
               of May 2004. Assuming 100% acceptance by the minority holders
               of AmBev's common shares in the mandatory tender offer ("MTO")
               Interbrew will be required to conduct pursuant to Brazilian law
               following the consummation of the transactions, Interbrew will
               acquire an additional 3.6 billion AmBev common shares,
               increasing its stake in AmBev to an approximately 84% voting
               interest and 54% economic interest; and

          o    Messrs. Lemann, Telles and Sicupira will acquire 141,712,000
               Interbrew shares, representing approximately a 24.7% voting and
               economic interest in Interbrew; Messrs. Lemann, Telles and
               Sicupira, together with Interbrew's existing controlling
               shareholder group, will jointly and equally, indirectly through
               Stichting Interbrew, exercise control over approximately
               321,712,000 Interbrew shares, representing approximately a 56%
               voting interest and economic interest in Interbrew.

AmBev expects that the Interbrew-AmBev Transactions will close in the third
quarter of 2004. AmBev believes these transactions will allow AmBev to develop
a presence in the Canadian beer market, provide an opportunity for Interbrew
to sell AmBev's brands under license in the countries where Interbrew
operates, and offer the potential for AmBev to benefit from Interbrew's brand
portfolio through imports of Interbrew brands in countries where AmBev
operates. The principal agreements with respect to the Interbrew-AmBev
Transactions are summarized below.



         PROPOSED ACQUISITION OF LABATT - INCORPORACAO AGREEMENT

     On March 3, 2004, AmBev entered into the Incorporacao Agreement with
Interbrew, Labatt and Labatt Brewing Canada Holding Ltd., a wholly owned
subsidiary of Interbrew ("Mergeco"), which will indirectly own 100% of the
capital stock of Labatt at the time the transactions contemplated by the
Incorporacao Agreement are to be consummated. Pursuant to the Incorporacao
Agreement, Mergeco will be merged into AmBev by means of an Incorporacao under
Brazilian law, and Interbrew (through the sale shareholder of Mergeco,
Interbrew International B.V., which is a wholloy owned subsidiary of
Interbrew) will receive approximately 7.9 billion newly issued AmBev common
shares and approximately 11.4 billion newly issued AmBev preferred shares. At
the time of the consummation of the Incorporacao, Mergeco will own 100% of the
capital stock minus one share of Labatt Holding ApS (Labatt Holdco), a
corporation organized under the laws of Denmark, and Labatt Holdco will own
all the capital stock of Labatt. Upon consummation of the Incorporacao, AmBev
will own 100% of the capital stock of Labatt Holdco, and indirectly, of
Labatt. Labatt will consist of its Canadian-based operations at the time the
Incorporacao is consummated.

                                     -iv-

<PAGE>


     On May 24, 2004, Interbrew and Fomento Economico Mexicano, S.A. de C.V.
("Femsa") announced that they had reached an agreement to unwind their
respective indirect minority interests in Femsa Cerveza, S.A. de C.V. ("Femsa
Cerveza") and Labatt USA L.L.C. ("Labatt USA"). Interbrew has agreed to sell
its indirect 30% interest in Femsa Cerveza to Femsa for $1.245 billion
following the closing of the Incorporacao. At the same time, the exclusive US
distribution rights to Femsa Cerveza's brands will be assigned by Labatt USA
to a subsidiary of Femsa in exchange for the redemption of Femsa's indirect
30% interest in Labatt USA. Upon completion of these transactions, Interbrew
will own 100% of Labatt USA and Femsa will own 100% of Femsa Cerveza. Labatt's
interests in Femsa Cerveza and Labatt USA have been transferred to another
subsidiary of Interbrew that is not a subsidiary of Labatt. As a result,
neither interest will be among the businesses transferred to AmBev pursuant to
the Incorporacao.

     Accordingly, as a result of the transactions described above and as
provided in the Incorporacao Agreement, the number of common shares to be
issued to Interbrew will be reduced approximately 9.5 billion to approximately
7.9 billion and the number of preferred shares to be issued to Interbrew will
be reduced from approximately 13.8 billion to approximately 11.4 billion. In
addition, the aggregate third party net debt of Labatt and its subsidiaries at
the time the Incorporacao is to be consummated will be C$1.3 billion.

     Pursuant to the Incorporacao Agreement, AmBev has generally agreed, until
the closing date, or, if the closing does not occur, the second anniversary
after the termination of the agreement, not to, directly or indirectly, (i)
acquire or offer or agree to acquire, directly or indirectly, by purchase or
otherwise, any equity securities or securities convertible into equity
securities of Interbrew or any of its affiliates or subsidiaries, (ii) propose
to enter into, directly or indirectly, any merger or business combination
involving Interbrew or any of its subsidiaries, (iii) otherwise seek to
influence or control, in any manner whatsoever (including proxy solicitation
or otherwise), the management or policies of Interbrew or any of its
subsidiaries, (iv) solicit, initiate or encourage any proposal for an
amalgamation, a merger or other business combination, sale of securities, sale
of substantial assets, joint venture, or similar transaction involving AmBev
(an "AmBev Bid"), (v) enter into any agreement with respect to any AmBev Bid,
(vi) participate in any discussions or negotiations regarding, or furnish to
any person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any AmBev Bid, (vii) assist, advise or
encourage (including by knowingly providing or arranging financing for that
purpose) any other person in doing any of the foregoing, or (vii) disclose any
intention or plan inconsistent with the foregoing.

     Pursuant to the Incorporacao Agreement, each of Interbrew and Labatt have
agreed to a "no solicitation" provision which will remain in effect until the
closing date or, if the closing does not occur and the agreement is
terminated, for two years following the date of termination. The "no
solicitation" provision generally restricts the ability of Interbrew and
Labatt to solicit or enter into agreements that would enable a third party to
acquire control over it. In addition, pursuant to the Incorporacao Agreement,
Interbrew has agreed not to transfer any of the capital stock of Labatt or any
interest therein, or enter into any contract, option or other arrangement with
respect to the transfer (including any profit sharing or other derivative
arrangement) of any of the capital stock of Labatt or any interest therein,
except in compliance with the provisions of the Incorporacao Agreement.


                                     -v-

<PAGE>



     The closing of the Incorporacao Agreement is subject to the satisfaction
of various conditions, including the approval of the applicable antitrust
authorities and the closing of the transactions contemplated by the
Contribution and Subscription Agreement described below.

     CONTRIBUTION AND SUBSCRIPTION AGREEMENT

     On March 3, 2004, S-Braco Participacoes S.A., Rougeval Limited, Tinsel
Investments Inc., ECAP, Braco S.A., Braco Management Inc., Tinsel
Participacoes Ltda., Tinsel Investments S.A. ("Tinsel Lux"), BRC S.A. ("BRC")
and Bracopar S.A. (collectively, the "SB Group Companies") entered into a
Contribution and Subscription Agreement with the Stichting Interbrew (the
"Stichting"), Eugenie Patri Sebastien ("EPS"), and Interbrew. Messrs. Lemann,
Telles and Sicupira control, directly or indirectly, all of the SB Group
Companies. The Stichting is a foundation organized under Dutch law which
currently holds, on behalf of EPS and affiliates of EPS, approximately 275.1
million ordinary shares of Interbrew, representing approximately 64% of the
outstanding ordinary shares of Interbrew.(1)

     Pursuant to the Contribution and Subscription Agreement, the SB Group
Companies are in the process of reorganizing their direct and indirect
holdings of Ambev common shares such that, upon closing of the transactions
contemplated by the Contribution and Subscription Agreement, an SB Group
Company (BRC) will contribute to Interbrew 100% of the capital stock of
another SB Group Company (Tinsel Lux) that will indirectly own (i) a total of
approximately 4.2 billion AmBev common shares and (ii) approximately 98.64% of
the capital stock of ECAP, which directly owns approximately 4.0 billion AmBev
common shares. In exchange for the contribution to Interbrew of 100% of the
capital stock of Tinsel Lux, Interbrew will issue to BRC approximately 141.7
million ordinary shares of Interbrew. The closing of the transactions
contemplated by the Contribution and Subscription Agreement is subject to the
satisfaction of various conditions, including the approval of the applicable
antitrust authorities and the closing of the transactions contemplated by the
Incorporacao Agreement. The Contribution and Subscription Agreement can be
terminated by mutual consent of the SB Group Companies and Interbrew, or by
either the SB Group Companies or Interbrew if, prior to closing, the
Incorporacao Agreement is terminated in accordance with its terms.

     Upon closing of the transactions contemplated by the Contribution and
Subscription Agreement, Mr. Lemann, Mr. Sicupira and Mr. Telles would
beneficially own, through their interests in BRC, the Interbrew shares to be
acquired by BRC, and Interbrew would beneficially own the Ambev common shares
that are currently beneficially owned by Mr. Lemann, Mr. Sicupira and Mr.
Telles by virtue of their interests in the SB Group Companies.

     Pursuant to the Contribution and Subscription Agreement, each party has
agreed to a "no solicitation" provision which will remain in effect until the
closing of the transactions contemplated by the Contribution and Subscription
Agreement or, if the closing does not occur and the agreement is terminated,
for two years following the date of termination. The "no solicitation"
provision generally restricts the right of any of the SB Group Companies, on
the one hand, and Interbrew, EPS and the Stichting, on the other hand, to
attempt to acquire control over one another without the prior written consent
of the board of directors of the "target" party, and restricts the ability of
each party to solicit or enter into agreements that would enable a third party
to acquire control over it.

     In addition, pursuant to the Contribution and Subscription Agreement, the
SB Group Companies have agreed not to transfer, directly or



---------------------------

(1) Based on publicly available information, AmBev believes that: The
Stichting was organized by members of several Belgian families who
collectively hold a controlling interest in Interbrew as a means to
consolidate their shareholdings in Interbrew. In exchange for each Interbrew
Share transferred to it, the Stichting issues to the transferee a certificate
representing such share. The Stichting votes all of the Interbrew shares held
by it at general and extraordinary meetings of Interbrew and is managed by a
board of directors. The Stichting receives all dividends in respect of the
Interbrew shares held by it for distribution to its certificate holders. EPS,
an entity affiliated with such Belgian families, currently holds 176 million
Stichting certificates, and the Stichting currently holds approximately 275.1
million Interbrew shares, representing approximately 64% of all outstanding
Interbrew shares.


                                     -vi-


<PAGE>


indirectly, any shares or interests in any SB Group Company or any shares or
interests in AmBev. Similarly, EPS and the Stichting have agreed not to
transfer, directly or indirectly, 252 million Interbrew shares (including any
Stichting certificates representing the 252 million Interbrew shares or any
other interests in the 252 million Interbrew shares). These restrictions on
transfer will terminate upon the closing of the transactions contemplated by
the Contribution and Subscription Agreement, or, if the closing does not
occur, upon the termination of the Contribution and Subscription Agreement in
accordance with its terms.

     The Contribution and Subscription Agreement also contains certain
restrictions on the business and activities of the SB Group Companies and
AmBev, on the one hand, and Interbrew, EPS and the Stichting, on the other
hand, until the closing of the transactions contemplated by the Contribution
and Subscription Agreement. In general, these restrictions obligate the
parties to conduct their respective businesses in the ordinary course
consistent with past practice and impose certain limitations with respect to,
among other things, the incurrence of debt beyond a specified amount,
significant acquisitions or dispositions, and issuances of stock.

          Mandatory Tender Offer
          ----------------------

     The Contribution and Subscription Agreement provides that, as required by
Brazilian law, Interbrew will make a mandatory tender offer ("MTO") following
the closing of the transactions contemplated by the Contribution and
Subscription Agreement for all shares of AmBev common stock not owned by it.
As required by Brazilian law, the price to be paid by Interbrew for each share
of AmBev common stock pursuant to the MTO will be an amount equal to 80% of
the per share consideration received by the SB Group Companies in respect of
the contribution of the AmBev common shares.

          BAC Tag-Along Right
          -------------------

     In addition, the Contribution and Subscription Agreement provides that,
to the extent a BAC shareholder exercises its tag-along right (BAC Tag-Along
Right) under the stock purchase agreement dated March 1, 2002, as amended,
between AmBev and BAC, (a) Interbrew will, at such BAC shareholder's option,
either (i) issue such BAC shareholder a number of shares of Interbrew in
accordance with the BAC Tag-Along Right, or (ii) purchase such BAC
shareholder's AmBev common shares for cash, and (b) BRC will (x)
simultaneously with Interbrew's issuance or payment to such BAC shareholder,
pay to Interbrew a cash amount equal to any premium paid by Interbrew in
connection with the BAC Tag-Along Right or (y) elect to reduce the number of
Interbrew shares being received by BRC equal to such premium divided by the
closing price of the Interbrew shares on the day immediately prior to the
closing date of the transactions contemplated by the Contribution and
Subscription Agreement during which the Interbrew common stock is trading on
Euronext Brussels.


          Interbrew Shareholders' Agreement
          --------------------------------

     In connection with the Contribution and Subscription Agreement, on March
2, 2004, BRC, EPS, an affiliate of EPS, Rayvax Societe d'Investissements S.A.
("Rayvax") and the Stichting entered into a shareholders agreement (the
"Interbrew Shareholders' Agreement") to become effective with respect to its
operative provisions upon the closing of the transactions contemplated by the
Contribution and Subscription Agreement. The Interbrew Shareholders Agreement
will provide for BRC and EPS to hold their interests in Interbrew through the
Stichting and will address, among other things, certain matters relating to
the governance and management of the Stichting and Interbrew as well as the
transfers of interests in Interbrew. Upon the closing of the transactions
contemplated by the Contribution and Subscription Agreement, BRC will transfer
all 141.7 million of its Interbrew shares to the Stichting in exchange for
141.7 million Stichting certificates, and EPS will hold at least 180 million
Stichting certificates (representing 180 million Interbrew shares). The
approximately 321.7 million Interbrew shares anticipated to be held by the
Stichting upon the closing of the transactions contemplated by the
Contribution and Subscription Agreement will represent approximately 56% of
all issued and outstanding Interbrew shares at that time.

     Pursuant to the terms of the Interbrew Shareholders' Agreement, BRC and
EPS will jointly and equally exercise control over the Stichting and the
Interbrew shares held by the Stichting. Among other things, BRC and EPS have
agreed that the Stichting will be managed by an eight-member board of


                                    -vii-


<PAGE>


directors and that they each will have the right to appoint four directors to
the Stichting board. At least seven of the eight Stichting directors must be
present in order to constitute a quorum, and any action to be taken by the
Stichting board will, subject to certain qualified majority conditions,
require the approval of a majority of the directors present, including at
least two directors appointed by BRC and two appointed by EPS. Subject to
certain exceptions, all decisions of the Stichting with respect to the
Interbrew shares it will hold on behalf of BRC and EPS, including how the
Stichting's Interbrew shares will be voted at all general and extraordinary
shareholder meetings of Interbrew, will be made by the Stichting board. In
addition, the Interbrew Shareholders Agreement will provide that the board of
directors of Interbrew will have between 12 and 14 members, four of which will
be nominated by EPS, four of which will be nominated by BRC and four to six of
which will be independent directors nominated by the Stichting's board.

     The Interbrew Shareholders' Agreement requires the Stichting's board to
meet prior to each shareholder meeting of Interbrew to determine how the
Stichting's Interbrew shares will be voted. In addition, the Interbrew
Shareholders Agreement will require Interbrew's bylaws to require
shareholders' approval with a qualified majority of 75% with respect to a
number of significant matters affecting Interbrew, including issuances of
stock (except for issuances made by the board of directors of Interbrew within
the authorized capital), mergers, large acquisitions and dispositions and
changes in Interbrew's dividend policy. The Interbrew Shareholders Agreement
also provides for Interbrew's bylaws to require that a majority of the
shareholders (50% of votes cast plus one) approve various other matters, such
as the appointment and dismissal of Interbrew's CEO, ratification of certain
transactions with affiliates and any other matter that under Belgian law must
be approved by the shareholders.

     The Interbrew Shareholders' Agreement also contains procedures to address
any deadlocks that may arise as a consequence of the exercise of joint and
equal control by BRC and EPS. In the event of a deadlock involving any matter
which requires the 75% supermajority shareholder approval referred to above,
the Interbrew Shareholders Agreement provides for a "buy/sell" procedure by
which the party that desires to vote in favor of the particular matter (the
"approving party") may require that the other party (the "dissenting party")
take one of two actions: the dissenting party must either buy the approving
party's Stichting certificates or the dissenting party must sell its Stichting
certificates to the approving party, in each case at prices set by the
approving party. The "buy/sell" procedure will not be exercisable by either
BRC or EPS for the first five years after the closing of the transactions
contemplated by the Contribution and Subscription Agreement and will also
impose a 360 day "cooling off" period before the procedure may be exercised
following any deadlock.

     The Interbrew Shareholders' Agreement provides for restrictions on the
ability of BRC and EPS to transfer their Stichting certificates (and
consequently their Interbrew shares held through the Stichting). EPS has
agreed that it will at all times hold, directly or indirectly, no less than
180,000,000 Stichting certificates (representing 180,000,000 Interbrew
shares), and BRC has agreed that it will at all times hold, directly or
indirectly, no less than 141,712,000 Stichting certificates (representing
141,712,000 Interbrew shares). In addition, the Interbrew Shareholders'
Agreement will require certain affiliates of EPS whose Interbrew shares are
not held through the Stichting to vote their Interbrew shares in the same
manner as the Interbrew shares held by the Stichting and will restrict such
affiliates' ability to transfer their Interbrew shares in a manner that would
disrupt the orderly trading of the Interbrew shares. In addition, under the
Interbrew Shareholders Agreement, EPS and BRC will agree not to acquire any
shares of capital stock of AmBev, subject to limited exceptions.

     The Interbrew Shareholders' Agreement will remain in effect for an initial
term of 20 years from the date of closing of the transactions contemplated by
the Contribution and Subscription Agreement. Thereafter, the Interbrew
Shareholders Agreement will be automatically renewed for successive renewal
terms of 10 years each unless, not later than two years prior to the
expiration of the initial or any renewal term, either BRC or EPS notifies the
other of its intention to terminate the agreement. Amendments to the
Stichting's organizational documents (its Conditions of Administration and
ByLaws) and Interbrew's bylaws, which reflect and implement the agreements
contained in the Interbrew Shareholders' Agreement, will take effect upon the
closing of the transactions contemplated by the Contribution and Subscription
Agreement.

                                    -viii-


<PAGE>


         Lock-up Agreements
         ------------------

     In connection with the Contribution and Subscription Agreement, on March
2, 2004, Interbrew, Mr. Lemann, Mr. Sicupira and Mr. Telles entered into a
lock-up agreement whereby Mr. Lemann, Mr. Sicupira and Mr. Telles have agreed
not to transfer, directly or indirectly, or consent to or permit any transfer
of, any AmBev shares held directly or indirectly by them to any person, and to
vote and cause any entities they control that hold AmBev shares to vote in
favor of the transactions contemplated by the Contribution and Subscription
Agreement, including the Incorporacao and the Incorporacao
Agreement, at any AmBev shareholders meeting where these items are on the
agenda. The transfer restrictions in the lock-up agreement expire on the
earliest of (i) the closing of the Contribution and Subscription Agreement,
(ii) the date of termination of the transactions contemplated by the
Contribution and Subscription Agreement and (iii) June 30, 2005. The voting
restrictions in the lock-up agreement terminate on the earlier of (i) the
closing of the transactions contemplated by the Contribution and Subscription
Agreement and (ii) the date of termination of the Contribution and
Subscription Agreement.

     In connection with the Contribution and Subscription Agreement, on March
2, 2004, EPS and BRC entered into a lock-up agreement providing for certain
restrictions on the transfer by EPS and certain of its affiliates of 72
million Interbrew shares that are not held on their behalf by the Stichting.
These transfer restrictions terminate on June 30, 2005. The lock-up agreement
also contains an undertaking from EPS that, beginning July 1, 2005, they will
effect any sales of Interbrew shares not required to be held by the Stichting
on their behalf pursuant to Interbrew Shareholders Agreement in an orderly
manner so as not to disrupt trading in the Interbrew shares.

OVERVIEW OF LABATT

     Labatt is one of Canada's two leading brewers with an estimated market
share of 43% at the end of 2003. Labatt brews approximately 60 different
brands (including brand extensions) in the specialty import, specialty
domestic, premium and value segments. Labatt's brand portfolio in Canada
includes Labatt Blue(R), Kokanee(R) and Keith's(R). Labatt also brews and
distributes Budweiser, the fastest-growing brand in Canada, under license from
Anheuser-Busch. Labatt's beer portfolio includes 11 of the top 20 brands sold
in Canada, including the top-selling and third place beers, Budweiser and
Labatt Blue(R), respectively. All of Labatt's beer, except for speciality
imports, is produced in Canada at eight breweries located across Canada.
Labatt distributes and sells its beers in Canada and the United States. Labatt
is a wholly owned subsidiary of Interbrew, which acquired Labatt in 1995.

     As contemplated in the Incorporacao Agreement, Labatt completed a series
of restructuring transactions in May 2004 that included the sale of interests
in various non-Canadian operating subsidiaries, the winding up of one or more
holding companies that held such interests, the transfer to a subsidiary of
Interbrew of various inactive Canadian and U.S. subsidiaries and the transfer
to another subsidiary of Interbrew of Labatt's 70% interest in Labatt USA and
its 30% interest in Femsa Cerveza. In addition, certain intercompany
indebtedness payable by Labatt to a subsidiary of Interbrew was repaid and
certain indebtedness owing by subsidiaries of Labatt that were transferred to
subsidiaries of Interbrew was capitalized in advance of the transfers. As a
result of these restructuring transactions, Labatt's assets now consist
primarily of a wholly owned Canadian brewing operation, which is referred to
in this annual report as "Labatt Canada."

     Labatt Canada prepared "carve-out" combined financial statements in
Canadian dollars as at December 31, 2003 and 2002 and for the three-year
period ended December 31, 2003 in accordance with Canadian generally accepted
accounting principles. In 2003, Labatt Canada had net sales of C$2,005 million
compared to C$1,951 million in 2002 and C$1,882 million in 2001, operating
earnings of C$475 million compared to C$460 million in 2002 and C$397 million
in 2001 and net earnings of C$273 million compared to C$244 million in 2002
and C$173 million in 2001. At December 31, 2003, Labatt Canada had total
assets of C$2,288 million, liabilities of C$1,836 million and shareholders'
equity of C$452 million compared to C$2,271 million, C$2,069 million and C$202
million, respectively, as of December 31, 2002. Labatt Canada's eight
breweries across Canada have an aggregate annual beer production capacity of
approximately 14.4 million hectoliters. Labatt Canada's total volume of beer
produced in 2003 was approximately 11.5 million hectoliters.



                                     -ix-

<PAGE>




                       ACCOUNTING PERIODS AND PRINCIPLES


     We have prepared our audited annual consolidated financial statements as
of December 31, 2003 and 2002 and 2001 for the three years ended December 31,
2003 in Brazilian Reais in accordance with accounting practices generally
accepted in Brazil (Brazilian GAAP), which are based on Brazilian Corporate
Law (Law 6,404, as amended, by Law No. 9,457/97 and Brazilian Law No.
10,303/01, which we refer to collectively as Brazilian Corporate Law), the
rules and regulations issued by the "Comissao de Valores Mobiliarios"- CVM, or
the Brazilian Securities Commission, and the accounting standards issued by
the IBRACON - "Instituto dos Auditores Independentes do Brasil", or the
Brazilian Institute of Independent Accountants), as applied by us in preparing
our statutory financial statements and annual report and accounts, which
differ in certain significant respects from accounting principles generally
accepted in the United States (U.S. GAAP). The audited financial statements
included in this annual report have been prepared in accordance with Brazilian
GAAP and include a reconciliation of net income and shareholders equity to
U.S. GAAP. In addition to the reconciliation of these key balances, the
financial statements also include a discussion of the reconciling differences
in accounting principles and the presentation of the U.S. GAAP condensed
balance sheets and statement of operations in Brazilian Reais. The financial
information contained in this annual report is in accordance with Brazilian
GAAP, except as otherwise noted.

     Prior to July 1, 1999, the date of the controlling shareholders'
contribution, AmBev had no material assets, liabilities or operations. AmBev
was created by the combination of Brahma and Antarctica



                                     -x-


<PAGE>


on that date and was accounted for as a merger under Brazilian GAAP. However,
for purposes of presenting the Brazilian GAAP and U.S. GAAP Selected Financial
Data in this annual report, AmBev was treated as the successor to Brahma. We
have included in the Selected Financial Data, for comparison purposes, the
financial information of the predecessor company, Brahma, for the year ended
December 31, 1999, which under Brazilian GAAP does not include the merger with
Antarctica.

     Percentages and some amounts in this annual report have been rounded for
ease of presentation. Any discrepancies between totals and the sums of the
amounts listed are due to rounding.


                             CURRENCY TRANSLATION

     In this annual report, references to "real", "Reais" or "R$" are to the
Brazilian legal currency. References to "U.S. dollar" or "U.S.$" are to the
legal currency of the United States and references to "Canadian dollar" or
"C$" are to the legal currency of Canada. We have translated some of the
Brazilian currency amounts contained in this annual report into U.S. dollars.
All financial information relating to us that is presented in U.S. dollars in
this annual report has been translated from Reais at the period end exchange
rate or average exchange rate prevailing during the period, as published by
the Central Bank of Brazil (Central Bank), unless the context otherwise
requires. The commercial market rate on May 31, 2004 was R$3.1291 to U.S.$1.00
as published by the Central Bank. The U.S. dollar equivalent information
presented in this annual report is provided solely for the convenience of the
readers of this annual report and should not be construed as implying that the
Brazilian currency amounts represent, or could have been or could be converted
into, U.S. dollars at such rates or at any rate. See "Key Information-Exchange
Rate Information-Exchange Controls" for more detailed information regarding
the translation of Reais into U.S. dollars.


                                     -xi-

<PAGE>



                                 INDUSTRY DATA

     In this annual report, we refer to information regarding the beverage
market and its segments and competitors from:

EUROMONITOR
Contact: Anne Nugent / Luka Erceg
60-61 Britton Street
London
EC1M5UX
Tel.: 44 (0) 20 7251 8024
www.euromonitor.com http://www.euromonitor.com

ACNIELSEN
Contact: Antonio Marcio Mongelli Garotti
Rua Monte Castelo, 55
Granja Viana
Cotia - Sao Paulo
CEP 06710-675
Tel.: 55 11 4613 7000
www.acnielsen.com.br http://www.acnielsen.com.br

PEPSICO
Contact: Vasco Luce
Rua Verbo Divino, 1661 - 7o. andar
Sao Paulo - SP
CEP 04719 002
Tel.: 55 11 2122 1288
www.pepsi.com http://www.pepsi.com
www.pepsi.com.br http://www.pepsi.com.br


                                  TRADEMARKS

     This annual report includes names of our products which constitute
trademarks or trade names which we own or which are owned by others and are
licensed to us for our use. This annual report also contains other brand
names, trade names, trademarks or service marks of other companies, and these
brand names, trade names, trademarks or service marks are the property of
those other companies.


                        CAUTIONARY STATEMENT REGARDING
                          FORWARD-LOOKING INFORMATION

     We make forward-looking statements in this annual report that are subject
to risks and uncertainties. These statements are based on the beliefs and
assumptions of our management, and on information currently available to us.
Forward-looking statements include statements regarding the intent, belief or
current expectations of AmBev or its directors or executive officers with
respect to, but not limited to:

     o    the declaration or payment of dividends;

     o    the direction of future operations;

     o    the implementation of principal operating strategies, including
          existing, potential acquisition or joint venture transactions or
          other investment opportunities, including, without limitation, the
          proposed acquisition of Labatt;


                                    -xii-


<PAGE>


          o    the implementation of AmBev's financing strategy and capital
               expenditure plans;

          o    the utilization of AmBev's subsidiaries' income tax losses;

          o    the factors or trends affecting AmBev's financial condition,
               liquidity or results of operations;

          o    the implementation of the measures required under AmBev's
               performance agreement entered into with CADE; and

          o    the implementation of the measures required by Argentina's
               Comision Nacional de Defensa de la Competencia (CNDC) under
               AmBev's agreements with BAC and Quinsa.

     Forward-looking statements also include information concerning possible
or assumed future results of operations of AmBev set forth under "Information
on the Company - Business Overview" and "Financial Information" as well as
statements preceded by, followed by, or that include, the words "believes",
"may", "will", "continues", "expects", "anticipates", "intends", "plans",
"estimates" or similar expressions.

     Forward-looking statements are not guarantees of performance. They
involve risks, uncertainties and assumptions because they relate to future
events and therefore depend on circumstances that may or may not occur in the
future. The future results and shareholder values of AmBev may differ
materially from those expressed in or suggested by these forward-looking
statements. Many of the factors that will determine these results and values
are beyond our ability to control or predict. Investors are cautioned not to
put undue reliance on any forward-looking statements.

     Investors should understand that the following important factors, in
addition to those discussed in this annual report, could affect the future
results of AmBev and could cause results to differ materially from those
expressed in such forward-looking statements:

     o    general economic conditions in the principal geographic markets of
          AmBev, such as the rates of economic growth, fluctuations in
          exchange rates or inflation;

     o    governmental intervention, resulting in changes to the economic, tax
          or regulatory environment in Brazil or other countries in which we
          operate;

     o    industry conditions, such as the strength of product demand, the
          intensity of competition, pricing pressures, the introduction of new
          products by AmBev, the introduction of new products by competitors,
          changes in technology or in the ability of AmBev to obtain products
          and equipment from suppliers without interruption and at reasonable
          prices, and the financial conditions of the customers and
          distributors of AmBev; and

     o    operating factors, such as the continued success of sales,
          manufacturing and distribution activities of AmBev and the
          consequent achievement of efficiencies.


                                    -xiii-


<PAGE>



                                    PART I

Identity of Directors, Senior Management and Advisers

Not Applicable.

Offer Statistics and Expected Timetable

Not Applicable.

Key Information


                        AMBEV'S SELECTED FINANCIAL DATA

     The following financial information of AmBev and Brahma is only a summary
and should be read in conjunction with, and is qualified in its entirety by
reference to, the audited annual consolidated financial statements of AmBev
and Brahma and the related notes which are included in this annual report.

     The following financial information of AmBev and Brahma is only a summary
and should be read in conjunction with, and is qualified in its entirety by
reference to, the audited annual consolidated financial statements of AmBev
and Brahma and the related notes which are included in this annual report.

     Our selected historical financial data prepared under Brazilian GAAP and
U.S. GAAP set forth below as of and for each of the years ended December 31,
2003, 2002, 2001, 2000 and 1999 have been derived from AmBev's consolidated
financial statements as of and for the periods ended December 31, 2003, 2002,
2001 and 2000, and Brahma's consolidated financial statements as of and for
the period ended December 31, 1999. Brazilian GAAP differs
significantly from U.S. GAAP and you should read the financial information in
conjunction with our audited financial statements, as well as "Operating and
Financial Review and Prospects".

     In September 2003, CBB issued US$500 million 8.75% notes due 2013 in a
transaction exempt from registration under the U.S. Securities Act of
1933. The original contracted interest rate may be increased by 0.5% if a
registered exchange offer with respect to the notes is not consummated by
September 18, 2004.

     During the year ended December 31, 2002, CBB completed an exchange offer
of the U.S.$ 500 million 10.5% notes due 2011, in the U.S. securities markets.

     AmBev fully and unconditionally guaranteed these two issuances. Financial
information relating to CBB has not been included within the Selected
Financial Data, but full consolidating schedules disclosing the balance
sheets, statements of operations and statements of cash flow as of December
31, 2003 and 2002 and for each of the years ended December 31, 2003, 2002 and
2001, under Brazilian GAAP, have been included in [note 24] to our audited
financial statements, contained within this document.

<PAGE>


<TABLE>
<CAPTION>
                                                    STATEMENT OF OPERATIONS DATA

                                          AS OF OR FOR THE YEAR ENDED DECEMBER 31,
                                      -------------------------------------------------------------------------

                                        2003(1)           2002(1)         2001(1)        2000(1)        1999(1)

                                                    (R$ in millions, except for per share amounts,
                                                      number of shares and other operating data)

<S>                                    <C>               <C>              <C>           <C>             <C>
BRAZILIAN GAAP

Statement of Operations Data:                                 SUCCESSOR                              PREDECESSOR

Gross sales, before taxes,
   discounts and returns.......         17,143.5         14,279.9         13,131.0      11,282.5         6,846.5
Net sales......................          8,683.8          7,325.3          6,525.6       5,250.4         3,248.3
Cost of sales..................         (4,044.2)        (3,341.7)        (3,366.2)     (2,843.7)       (1,905.1)
                                    -------------        --------           -------       -------          ------
Gross profit...................          4,639.6          3,983.6          3,159.4       2,406.7         1,343.2
Selling and marketing
   expenses....................           (847.1)          (687.2)          (707.8)       (578.6)         (350.7)
Direct distribution expenses...           (648.6)          (537.4)          (467.8)       (337.0)         (225.5)
General and administrative
    expenses(2)................           (417.9)          (373.5)          (351.5)       (373.0)         (206.9)
Depreciation  and amortization of
   deferred charges ...........           (420.0)          (334.6)          (256.5)       (202.3)          (95.4)
                                    -------------        --------           -------       -------          ------
                                         2,306.1          2,050.9          1,375.8         915.8           464.7

Provision for contingencies and
   other.......................           (187.9)          (123.7)           (33.9)       (269.2)          (51.2)
Other operating income, net(4).            246.1            199.4            152.2           9.1            66.3
Financial income...............            601.8          2,530.3            358.4         374.0           675.1
Financial expenses.............           (508.7)        (3,277.3)          (861.5)       (698.0)         (804.4)
                                    -------------        --------           -------       -------          ------
OPERATING INCOME (3) ..........          1,964.9          1,379.6            991.0         331.7           350.5
Non-operating income (expense),
   net(4)......................           (100.7)           (72.2)             2.3          52.7           (19.9)
Income tax benefit (expense)...           (426.1)           280.6            (51.9)        405.4            17.6
Income before equity in
   affiliates, profit sharing and
   minority interest...........          1,438.1         1,588.0             941.4         789.8           348.1
Profit sharing and contributions           (23.6)         (125.1)           (157.1)        (53.7)          (39.9)
Minority interest..............             (2.9)           47.4               0.3        (265.9)           14.0
                                    -------------        --------           -------       -------          ------
NET INCOME ....................          1,411.6         1,510.3             784.6         470.2           322.3
                                    =============        ========           =======       =======          ======

Net income per 1,000 shares
   (excluding treasury shares) at
   year end(4).................            37.23            39.48            20.31         12.19           46.66
Net income per ADS(5) at
   year end....................             3.72             3.95             2.03          1.22            4.67
Dividends and interest
   attributable to shareholder's
   equity per 1,000 shares
   (excluding treasury
   shares)(4)(6) (7)
     Common shares.............            23.15            12.40             7.17          8.00           20.65
     Preferred shares..........            25.46            13.64             7.89          8.37           22.70
Number of shares outstanding at
   year end, excluding treasury
   shares (in thousands)
     Common shares.............       15,631,332       15,694,772       15,801,482    15,946,841       2,628,451
     Preferred shares..........       22,281,302       22,551,143       22,819,443    22,616,017       4,279,160

</TABLE>


                                      2
<PAGE>


<TABLE>
<CAPTION>


                                                      AS OF OR FOR THE YEAR ENDED DECEMBER 31,
                                      -------------------------------------------------------------------------

                                         2003(1)             2002(1)          2001(1)         2000(1)           1999(1)

                                                    (R$ in millions, except for per share amounts,
                                                      number of shares and other operating data)
<S>                                     <C>               <C>              <C>            <C>           <C>
US GAAP

Net income (loss)..............          1,689.4            1,642.2             840.1           879.2          (173.7)
Net income per 1,000 shares
   (weighted average)(4)(8)(9)
     - Basic
         Common shares.........            46.87              45.05             22.84           22.91           (5.60)
         Preferred shares......            51.56              49.55             25.13           25.20           (5.04)
     - Diluted
         Common shares.........            46.52              44.69             22.55           22.05           (5.37)
         Preferred shares......            51.17              49.16             24.80           24.26           (4.83)
Net income (loss) per ADS(5)
     - Basic
         Common shares.........             4.69               4.51              2.28            2.29           (0.56)
         Preferred shares......             5.16               4.96              2.51            2.52           (0.50)
     - Diluted
         Common shares.........             4.65               4.47              2.26            2.21           (0.54)
         Preferred shares......             5.12               4.92              2.48            2.43           (0.48)
Dividends and interest
   attributable to shareholders
   equity per 1,000 shares
   (weighted average)(4)(6) (7)
     - Basic
         Common shares.........            26.32               5.38              6.82            7.60            5.06
         Preferred shares......            28.96               5.92              7.50            8.37            5.56
     - Diluted
         Common shares.........            26.12               5.34              6.73            7.32            4.84
         Preferred shares......            28.74               5.87              7.40            8.05            5.32
Weighted average number of shares
   (thousands)(4)(8)(9)(10)
     - Basic
         Common shares.........       11,894,931         12,061,879        12,259,953      14,265,323      11,949,367
         Preferred shares......       21,952,196         22,173,258        22,291,121      21,919,724      21,173,565
     - Diluted
         Common shares.........       11,894,931         12,061,879        12,259,953      14,475,271      12,206,392
         Preferred shares......       22,202,776         22,441,743        22,726,632      23,090,525      22,384,145

</TABLE>


                                                                 3
<PAGE>


<TABLE>
<CAPTION>


                                                         BALANCE SHEET DATA


                                                            AS OF OR FOR THE YEAR ENDED DECEMBER 31,

                                        2003(1)           2002(1)         2001(1)        2000(1)        1999(1)
<S>                                     <C>               <C>             <C>            <C>            <C>

                                                    (R$ in millions, except for per share amounts,
                                                      number of shares and other operating data)
BRAZILIAN GAAP

Balance Sheet Data:
Cash, cash equivalents and short
    term investments...........          2,690.0          3,290.0          2,562.9       1,028.3        1,697.4
Total current assets...........          5,500.5          5,571.4          4,684.9       2,687.6        2,723.1
Prepaid retirement benefit cost (14)        22.0             21.6             20.8
Investments....................          1,711.4            637.3            662.6         659.6           61.2
Property, plant and equipment,
    net........................          4,166.3          3,330.6          3,277.7       3,204.3        1,898.6
Deferred income tax - non-current        1,831.8          1,558.4          1,160.3         996.1          240.8
Total assets...................         14,830.1         12,381.5         11,028.8       8,639.7        5,425.9
Short-term debt(11)............          1,976.1            607.4          1,720.0       1,265.3        1,042.9
Total current liabilities......          4,720.0          2,833.7          3,412.0       2,699.6        1,889.1
Long-term debt(12).............          4,004.3          3,879.3          2,849.4         927.6          938.7
Accrued liability for
    contingencies..............          1,232.9            989.3            815.5         878.0          288.6
Sales tax deferrals and other tax
    credits(13)................            772.1            803.1            746.8         650.6          569.6
Post-retirement benefit (14)                72.9             53.4             55.6
Total long-term liabilities....          5,605.5          5,339.1          4,164.4       2,350.6        1,872.7
Minority interest..............            196.4             79.1             88.9         512.5           57.7
Subscribed and paid-up
    capital....................          3,124.1          3,046.2          2,994.3       2,565.2          909.3
Shareholders' equity...........          4,382.9          4,129.6          3,363.5       3,077.0        1,606.4

U.S. GAAP

Total assets...................         13,766.0         11,584.6         10,195.9       7,743.0        3,109.7
Shareholders' equity...........          4,382.9          3,960.6          2,839.9       2,378.2        1,628.7

</TABLE>


                                                                 4
<PAGE>


<TABLE>
<CAPTION>


                                                             OTHER DATA

                                                             AS OF OR FOR THE YEAR ENDED DECEMBER 31,

                                           2003(1)           2002(1)         2001(1)          2000(1)         1999(1)

<S>                                   <C>                <C>              <C>              <C>                <C>
                                                    (R$ in millions, except for per share amounts,
                                                      number of shares and other operating data)

Other Financial Information:

Net working capital(15)........              780.5          2,737.7          1,273.0           (12.0)           834.0
Cash dividends paid(6).........            1,026.9            335.6            313.4            221.1           178.2
Depreciation and amortization of
    deferred charges (16)......              766.3            659.5            613.9            589.2           438.1
Capital expenditures(17).......              862.2            544.7            446.8            295.0           312.4
Operating cash flows -
    generated(18)..............            2,527.6          3,595.0          1,006.6          1,243.2         1,103.0
Investing cash
    flows - used(18)...........           (2,014.7)        (1,603.1)        (1,687.4)          (100.7)         (299.2)
Financing cash flows-
    generated - used(18).......             (346.7)        (2,912.2)         1,418.0         (2,065.7)         (187.4)


Other Operating Data:

Total production capacity -
    beer(19)...................         88.3 million hl  89.7 million hl  89.8 million hl  94.4 million hl    64.4 million hl
Total production capacity - CSD &
    NANC(19)...................         45.7 million hl  37.3 million hl  38.8 million hl  36.6 million hl    27.0 million hl
Total beer volume sold(20).....         62.4 million hl  62.0 million hl  62.4 million hl  64.8 million hl    43.2 million hl
Total CSD & NANC volume sold(20)        20.5 million hl  18.2 million hl  18.5 million hl  17.2 million hl     8.5 million hl
Number of employees(21)........                  18,890           18,570           18,136           18,172              9,416

<FN>
FOOTNOTES TO SELECTED FINANCIAL INFORMATION

(1)  Brahma and Antarctica were legally merged to form AmBev on July 1, 1999 under Brazilian GAAP. However, for purposes of this
     annual report, as AmBev was treated as the successor to Brahma for accounting purposes, financial information of AmBev, the
     successor, have been included as of and for the three years ended December 31, 2002. The selected financial information in all
     previous periods has been derived from the audited financial statements of the predecessor company, Brahma.

(2)  General and administrative expenses include director's fees.

(3)  Operating income under Brazilian GAAP is presented after financial income and financial expense.

(4)  The information is provided per thousand shares because AmBev common and preferred shares are generally traded on the Sao Paulo
     Stock Exchange in blocks of one thousand shares.

(5)  ADS represents American Depositary Shares. Each ADS represents 100 shares.

(6)  Includes dividends, interest attributable to shareholders' equity (including withholding tax paid by AmBev in respect thereof),
     and in 2000, returns of capital of R$111.8 million. Certain distributions in 2000 were made in the form of a return of capital
     rather than in the form of dividends or interest attributable to shareholders' equity because, prior to the completion of the
     Brahma conversion, AmBev did not have sufficient retained earnings to pay these amounts as dividends or interest attributable
     to shareholders' equity. The dividend and interest attributable to shareholders equity per 1,000 shares for Brazilian GAAP
     purposes is calculated net of withholding tax and therefore represents the amounts received as disclosed in "Dividends". We
     changed the criteria for reporting this amount in 2002 and therefore the dividends per share disclosed in the years prior to
     2002 do not conform to that disclosed in our 2001 annual report on Form 20-F.

(7)  Brazilian GAAP and U.S. GAAP differ on the recognition of declared / proposed dividends, specifically with regard to when the
     dividend should be recognized. The executive officers are required to propose a dividend at year end, which is subject to
     ratification by the shareholders at a general meeting and must be recognized under Brazilian GAAP. However, under U.S. GAAP,
     the proposed dividends may be modified or ratified by the shareholders at a general meeting and are treated as a deduction from
     shareholders' equity.

(8)  In the U.S. GAAP selected financial data only, all share and per share data have been adjusted to give effect, retroactively,
     to AmBev's five-for-one split of its common and preferred shares effective October 23, 2000. Because AmBev did not split its
     ADSs, the ADSs, which prior to the stock split had represented 20 common or preferred shares, represented 100 common or
     preferred shares following the stock split. In the Brazilian GAAP selected financial information, the historic share and per
     share information has not been adjusted and therefore reflects the actual number of shares in issue.



                                                                 5
<PAGE>


(9)  In the U.S. GAAP selected financial data only, earnings per share are calculated dividing the net income by the weighted
     average number of common and preferred shares outstanding during the relevant periods. In the Brazilian GAAP selected financial
     information section, earnings per share are calculated by dividing by the number of shares outstanding at the year end. AmBev's
     preferred shares are entitled to dividends 10% greater than the dividends paid to common shares.

(10) Under U.S. GAAP we have consolidated the net assets of the FAHZ, one of our major shareholders, on our balance sheet as of
     December 31, 2003, 2002, 2001 and 2000. As a result of our consolidating these net assets, AmBev shares owned by the FAHZ are
     treated as treasury shares, rather than outstanding shares, thereby reducing the number of our weighted average outstanding
     shares and increasing our earnings or loss per share. For the purposes of the predecessor company, Brahma, the Brahma Welfare
     Foundation was treated in a similar manner, resulting in a similar effect in the selected financial information as at and for
     the year ended December 31, 1999. For further information, please refer to our consolidated financial statements contained
     within this annual report.

(11) Includes current portion of long-term debt.

(12) Excludes current portion of long-term debt.

(13) In the financial statements as of and for the year end December 31, 2003, total tax incentives are R$768.7 million, of which
     R$393.6 million relate to deferred sales tax, and R$375.1 million to ICMS financing incentives.

(14) Consistent with accounting practice under Brazilian GAAP, we had not recognized our actuarial obligation
     for pension liabilities and post-retirement benefits, including medical benefits to retirees in our financial
     statements prior to December 31, 2001. Pension amounts due to the pension plan were treated on an accrual basis
     as the obligations fell due. However, following the issuance of a new accounting standard (NPC No. 26), we are
     required to record these actuarial obligations beginning in 2002. We had the option to account for these
     actuarial obligations at December 31, 2001 either against retained earnings or prospectively as a charge
     against earnings over five years. We elected to recognize the liability against retained earnings on
     December 31, 2001. The standard requires comprehensive recording of pension expenses and obligations on an
     actuarial basis instead of, as was previously required, based on the required contributions for the relevant
     year.

(15) Represents total current assets less total current liabilities.

(16) Includes depreciation of property, plant and equipment and amortization of deferred charges.

(17) Represents cash expenditures for property, plan and equipment.

(18) Operating, Investing and Financing cash flows data is derived from our financial statements included herewith.

(19) Represents available production capacity of Brahma and its subsidiaries (and not Antarctica or its subsidiaries) at December
     31, 1999, and thereafter represents the available production capacity of AmBev and its respective subsidiaries, domestic and
     international; Quinsa's production capacity not considered; (hl is the abbreviation for hectoliters; CSD & NANC is the
     abbreviation for Carbonated Soft Drinks and Non Alcoholic and Non Carbonated Soft Drinks).

(20) Represents volumes of Brahma and its subsidiaries (and not Antarctica or its subsidiaries) for the period ended on December 31,
     1999, and thereafter represents full-year volumes of AmBev and its respective subsidiaries; from January 31, 2003, includes 5.8
     million hectoliters of beer and 2.4 million hectoliters of CSD representing our proportional interest in Quinsa volumes.

(21) Includes all production- and non-production-related employees of Brahma and its subsidiaries at the end of the period ended on
     December 31, 1999, and thereafter includes all production- and non-production-related employees of AmBev and its respective
     subsidiaries.
</FN>

</TABLE>




                                                                 6
<PAGE>




                                   DIVIDENDS



     DIVIDEND POLICY

     AmBev intends to pay dividends twice a year to its shareholders; however,
the timing and amount of future dividend payments, if any, will depend upon
various factors the Board of Directors of AmBev considers relevant, including
the earnings and the financial condition of AmBev. AmBev's bylaws provide for
a mandatory dividend of 35% of its annual net income, if any, as determined
and adjusted under Brazilian GAAP (adjusted income). The mandatory dividend
includes amounts paid as interest attributable to shareholders' equity, which
is equivalent to a dividend but is a more tax efficient way to distribute
earnings because they are generally deductible by the company for Brazilian
income tax purposes. However, shareholders (including holders of ADSs) have to
pay Brazilian withholding tax on the amounts received as interest attributable
to shareholders' equity, whereas no such payment is required in connection
with dividends received. Although Ambev may distribute earnings in the form of
interest, the amount received by shareholders is the same or higher as if the
distribution were made in the form of dividends. Withholding tax is usually
paid by Brazilian companies, including AmBev, on behalf of their shareholders.

     Adjusted income may be capitalized, used to absorb losses or otherwise
appropriated as allowed under Brazilian Corporate Law; therefore, any adjusted
income may no longer be available to be paid as dividends. AmBev may also not
pay dividends to its shareholders in any particular fiscal year, upon the
determination by the Board of Directors that such distributions would be
inadvisable in view of AmBev's financial condition. Any such dividends not
distributed would be allocated to a special reserve account for future payment
to shareholders, unless it is used to offset subsequent losses. For further
information on this matter see " - Risk Factors - Risks Relating to our
Securities - AmBev shareholders may not receive any dividends". Any dividends
payable on AmBev's preferred shares must be 10% greater than those payable on
AmBev's common shares. See "Additional Information - Memorandum and Articles
of Association - Dividends and Reserves - Dividend Preference of Preferred
Shares".

     For further information on Brazilian Corporate Law provisions relating to
required reserves and payment of dividends or interest attributable to
shareholders' equity, as well as specific rules applicable to the payment of
dividends by AmBev, see "Additional Information - Memorandum and Articles of
Association Dividends and Reserves".


     AMBEV - DIVIDENDS AND INTEREST ATTRIBUTABLE TO SHAREHOLDERS' EQUITY

     The following table shows the dividends paid by AmBev's predecessor
Brahma, to its preferred and common shareholders from 1996 through September
15, 2000, and by AmBev to its preferred and common shareholders since
September 15, 2000 in Reais and in U.S. dollars translated from Brazilian
Reais at the commercial exchange rate as of the date of payment. The amounts
include interest attributable to shareholders' equity, net of withholding tax,
and return of capital. See "Additional Information - Memorandum and Articles
of Association - Interest Attributable to Shareholders' Equity".



                                      7
<PAGE>



<TABLE>
<CAPTION>


                                                                  Reais per
                                                                 thousand(1)        U.S. dollar equivalent per
Earnings generated                     First payment date         shares(2)        thousand(1) shares at payment date(4)
------------------                     ------------------        ----------        --------------------------------------
<S>                                    <C>                       <C>               <C>                        <C>

First half 1996.................       September 26, 1996            0.91          (preferred and common)     0.89

Second half 1996................         March 21, 1997              1.27          (preferred and common)     1.20

First half 1997.................         October 9, 1997             1.61               (preferred)           1.47
                                                                     1.46                 (common)            1.33
Second half 1997................           May 7, 1998               1.73               (preferred)           1.51
                                                                     1.57                 (common)            1.37
First half 1998.................         October 8, 1998             1.32               (preferred)           1.12
                                                                     1.20                 (common)            1.01
Second half 1998................          April 5, 1999              2.37               (preferred)           1.37
                                                                     2.16                 (common)            1.25
First half 1999.................          July 20, 1999              1.58               (preferred)           0.88
                                                                     1.44                 (common)            0.80
Second half 1999................         March 15, 2000              2.96               (preferred)           1.70
                                                                     2.69                 (common)            1.54
Extraordinary(3)................         March 23, 2000              1.88               (preferred)           1.09
                                                                     1.88                 (common)            1.09
Extraordinary(3)................        November 30, 2000            2.38               (preferred)           1.22
                                                                     2.38                 (common)            1.22
Second half 2000................        February 20, 2001            4.11               (preferred)           2.05
                                                                     3.74                 (common)            1.86
First half 2001.................       September 17, 2001            3.11               (preferred)           1.16
                                                                     2.83                 (common)            1.06
Second half 2001................        February 19, 2002            4.78               (preferred)           1.97
                                                                     4.34                 (common)            1.79
First half 2002.................        November 25, 2002            4.37               (preferred)           1.15
                                                                     3.97                 (common)            1.04
Second half 2002................        February 28, 2003            9.27               (preferred)           2.60
                                                                     8.43                 (common)            2.37
First half 2003.................        October 13, 2003            18.70               (preferred)           6.59
                                                                    17.00                 (common)            5.99
Second half 2003................         March 25, 2004              6.75               (preferred)           2.30
                                                                     6.14                 (common)            2.09
</TABLE>

----------------------------

(1)  The information is provided per thousand shares because AmBev common and
     preferred shares are generally traded on the Sao Paulo Stock Exchange in
     blocks of one thousand.

(2)  The amounts set forth above are amounts actually received (as adjusted to
     give effect retroactively to AmBev's common and preferred share
     five-for-one stock split effective October 23, 2000) by shareholders,
     which are net of withholding tax. The amounts set forth here represent
     pro-forma U.S. GAAP calculations for the impact of a stock split which is
     not required under Brazilian GAAP. The financial statements present the
     amounts actually disbursed, including the withholding tax on interest on
     shareholders' equity, which was paid on behalf of AmBev`s shareholders.
     The dividends per thousand shares set forth above are calculated based on
     the number of shares outstanding at the date the distributions were
     declared (as adjusted to give effect retroactively to AmBev's common and
     preferred share five-for-one stock split effective October 23, 2000).

(3)  On March 23, 2000 and on November 30, 2000 AmBev distributed R$1.88 (U.S.
     $1.09) per common and preferred shares and R$2.38 (U.S. $1.22) per common
     and preferred shares, respectively, to its shareholders as a return of
     capital.

(4)  Translated to U.S. dollars at the exchange rate in effect at the date
     declared.




                                      8
<PAGE>



                           EXCHANGE RATE INFORMATION


     There are two principal foreign exchange markets in Brazil:

o    the commercial rate exchange market; and

o    the floating rate exchange market.

          On February 1, 1999, the Central Bank authorized the unification of
the exchange positions of the Brazilian financial institutions in the
commercial rate exchange market and floating rate exchange market, which led
to a convergence in the pricing and liquidity of both markets. However, each
market continues to have a specific regulation. Most trade and financial
transactions are carried out on the commercial rate exchange market. The
floating market rate generally applies to transactions to which the commercial
market rate does not apply. Foreign currencies may only be purchased through a
Brazilian financial institution authorized to operate in these markets. In
both markets, rates are freely negotiated but may be strongly influenced by
Central Bank intervention.

      RECENT HISTORY OF THE BRAZILIAN REAL

          From March 1995 through January 1999, the Central Bank allowed the
gradual devaluation of the real against the U.S. dollar. Responding to
pressure on the real, the Central Bank widened the foreign exchange rate band
on January 15, 1999 and allowed the real to float freely. The real devalued to
a low for that year of R$2.165 per U.S. $1.00 on March 3, 1999, but
subsequently appreciated to R$1.789 per U.S. $1.00 on December 31, 1999,
representing a net devaluation against the U.S. dollar of 32.4% during 1999.
In 2000, the real devalued by a further 8.5% against the U.S. dollar.

          Further deterioration in the political and economic environment in
2001, in addition to the Brazilian energy crisis, resulted in the real
devaluing by 15.7% against the U.S. dollar in the year. In the final quarter
of 2001, however, the real actually appreciated by 15.1% from R$2.671 per U.S.
$1.00 at September 30, 2001 to R$2.3204 per U.S.$1.00 at December 31, 2001.

          In 2002, as a reaction to political and economic uncertainties, the
global economic downturn, the crisis in Argentina and the Brazilian
presidential elections, the U.S. dollar appreciated by 34.3% against the real
to R$3.5333 per U.S.$1.00 at December 31, 2002. While the real has recovered
during 2003, appreciating 22.3% against the U.S. dollar during 2003, no
assurance can be given that the real will not devalue further in the future.
The Central Bank has only intervened occasionally to control unstable
movements in the foreign exchange rate. See "Risk Factors-Risks Relating to
Brazil and Other Countries in Which We Operate Related to Brazil-Economic
uncertainty and volatility in Brazil may adversely affect our business."

     Recently, in 2004, statements from the Federal Reserve of the United
States regarding a potential increase in the interest rate, in combination
with other factors, caused some volatility and general economic uncertainty in
the Brazilian capital markets. As a consequence, the exchange rate as of May
31, 2004, was R$3.1291 per U.S.$1.00 compared with 2.8892 Reais at December
31, 2003. The exchange rate reached a low of 2.8022 Reais per U.S. dollar and
a high of 3.2051 Reais per U.S. dollar during the first five months of 2004.
The Central Bank reduced the base interest rate from 16.5% to 16.25% in March
2004, followed by a further reduction in April to 16.0%.

     No assurance can be given that the real will not devalue further in the
future. For further information on this matter see "- Risk Factors - Risks
Relating to Brazil and Other Countries in Which We Operate - Economic
uncertainty and volatility in Brazil may adversely affect our business".

     The following tables set forth commercial market rates for the purchase
of U.S. dollars for the periods indicated.



                                      9
<PAGE>




                                Annual Exchange Rates of Reais per U.S.$1.00
                           ----------------------------------------------------

                              2003       2002       2001        2000      1999
                            --------  ---------   ---------  --------- ---------

Low........................ R$2.8219  R$2.2709    R$1.9357   R$1.7234  R$1.2078
High.......................   3.6623    3.9552      2.8007     1.9847    2.1647
Average(1).................   3.0600    2.9983      2.3532     1.8348    1.8514
Period End.................   2.8892    3.5333      2.3204     1.9554    1.7890

Source:  Central Bank of Brazil

(1)  Represents the average of the month-end exchange rates during the
     relevant period.


<TABLE>
<CAPTION>


                                   2004 Monthly Exchange Rates of Reais per U.S.$1.00
                           --------------------------------------------------------------------
                                                   2004                              2003
                           ----------------------------------------------------   -------------
                            May        April      March      February    January    December
                           --------   ---------  --------   ----------  --------- -------------
<S>                         <C>       <C>        <C>         <C>         <C>        <C>
Low........................ R$2.9569  R$2.8743   R$2.8752     2.9042      2.8022     2.8883
High.......................   3.2051    2.9522     2.9410     2.9878      2.9409     2.9434

-------------
Source:  Central Bank of Brazil

</TABLE>


          Under current legislation, the Brazilian government may impose
temporary restrictions on remittances of foreign capital abroad in the event
of a serious imbalance or an anticipated serious imbalance of Brazil's balance
of payments. For approximately six months in 1989 and early 1990, the
Brazilian government froze all dividend and capital repatriations held by the
Central Bank that were owed to foreign equity investors in order to conserve
Brazil's foreign currency reserves. These amounts were subsequently released
in accordance with Brazilian government directives. We cannot assure you that
the Brazilian government will not impose similar restrictions on foreign
repatriations in the future. See "Risk Factors-Factors relating to Brazil and
Other Countries in Which We Operate-The Brazilian government has exercised,
and continues to exercise, significant influence over the Brazilian economy;
Brazilian economic and political conditions have a direct impact on our
business."

     We will pay any cash dividends and make any other cash distributions in
reais. Accordingly, exchange rate fluctuations may affect the U.S. dollar
amounts received by the holders of ADSs on conversion by the depositary of
such distributions into U.S. dollars for payment to holders of ADSs.
Fluctuations in the exchange rate between the real and the U.S. dollar may
also affect the U.S. dollar equivalent of real price of our shares on the Sao
Paulo Stock Exchange. For further information on this matter see " - Risk
Factors - Risks Relating to Our Securities".


                               EXCHANGE CONTROLS

     There are no restrictions on ownership of the ADSs or the preferred or
common shares by individuals or legal entities domiciled outside of Brazil.

     The right to convert dividend payments, interest attributable to
shareholders' equity payments and proceeds from the sale of preferred or
common shares into foreign currency and to remit such amounts outside Brazil
is subject to exchange control restrictions and foreign investment legislation
which generally requires, among other things, that relevant investments be
registered with the Central Bank. Restrictions on the remittance of foreign
capital abroad could hinder or prevent Banco Itau S.A. (the custodian) or
holders who have exchanged AmBev's ADSs for shares of AmBev, from converting
dividend distributions, interest on shareholders' equity or the proceeds from
any sale of shares of AmBev into U.S. dollars and remitting such U.S. dollars
abroad. Holders of AmBev ADSs could be adversely affected by delays in or
refusal to grant any required governmental approval for conversions of real
payments and remittances abroad.


                                      10
<PAGE>


     Under Brazilian law relating to foreign investment in the Brazilian
capital markets (Foreign Investment Regulations), foreign investors registered
with the CVM and acting through authorized custody accounts managed by local
agents may buy and sell shares on Brazilian stock exchanges without obtaining
separate certificates of registration for each transaction. Foreign investors
may register their investment under Law 4,131/62 or Resolution No. 2,689/00 of
the National Monetary Council.

     Under Resolution No. 2,689, foreign investors may invest in almost all
financial assets and engage in almost all transactions available in the
Brazilian financial and capital markets, provided that certain requirements
are fulfilled. In accordance with Resolution No. 2,689, the definition of a
foreign investor includes individuals, legal entities, mutual funds and other
collective investment entities, domiciled or headquartered abroad.

     Securities and other financial assets held by a Resolution No. 2,689
investor must be registered or maintained in deposit accounts or under the
custody of an entity duly licensed by the Brazilian Central Bank or the CVM.
In addition, any transfer of securities held under Resolution No. 2,689 must
be carried out in the stock exchanges or through organized over-the-counter
markets licensed by the CVM, except for specific types of transfers.

     Pursuant to the certificates of registration obtained by AmBev from the
Central Bank in the name of the Bank of New York with respect to the AmBev
ADSs to be maintained by the custodian (Banco Itau S.A. ) on behalf of the
Bank of New York, the custodian and The Bank of New York will be able to
convert dividends and other distributions with respect to the AmBev shares
represented by AmBev ADSs into foreign currency and remit the proceeds outside
of Brazil. In the event that a holder of AmBev ADSs exchanges such ADSs for
AmBev shares such holder will be entitled to continue to rely on The Bank of
New York's certificate of registration for only five business days after such
exchange, after which such holder must obtain its own certificate of
registration. Any such holder may not be able to obtain and remit abroad U.S.
dollars or other hard currencies upon the disposition of the shares or
distributions with respect to such disposition, unless such holder qualifies
under the Foreign Investment Regulations or obtains its own certificate of
registration, and such holder generally will be subject to less favorable
Brazilian tax treatment than a holder of AmBev ADSs. For further information
on this matter see "Additional Information - Taxation - Brazilian Tax
Considerations".

     Under current legislation, the Brazilian government may impose temporary
restrictions on remittances of foreign capital abroad in the event of a
serious imbalance or an anticipated serious imbalance of Brazil's balance of
payments. For approximately six months in 1989 and early 1990, the Brazilian
government froze all dividend and capital repatriations held by the Central
Bank that were owed to foreign equity investors in order to conserve Brazil's
foreign currency reserves. These amounts were subsequently released in
accordance with Brazilian government directives. We can not assure you that
the Brazilian government will not impose similar restrictions on foreign
repatriations in the future. For further information on this matter see " -
Risk Factors - Risks Relating to Our Securities - Controls and restrictions on
foreign currency remittance could harm the ability of AmBev to transfer
dividends payments to off-share investors".


                                      11
<PAGE>


     RISK FACTORS

     Before making an investment decision, you should consider all of the
information set forth in this annual report. In particular, you should
consider the special features applicable to an investment in Brazil and
applicable to an investment in AmBev, including those
set forth below. In general, investing in the securities of issuers in
emerging market countries, such as Brazil, involves a higher degree of risk
than investing in the securities of issuers in the United States.

     For purposes of this section, when we state that a risk, uncertainty or
problem may, could or would have an "adverse effect" on us, we mean that the
risk, uncertainty or problem may, could or would have an adverse effect on our
business, financial condition, liquidity, results of our operations or
prospects, except as otherwise indicated or as the context may otherwise
require. You should view similar expressions in this section as having a
similar meaning.



       RISKS RELATING TO BRAZIL AND OTHER COUNTRIES IN WHICH WE OPERATE



       ECONOMIC UNCERTAINTY AND VOLATILITY IN BRAZIL MAY ADVERSELY AFFECT OUR
       BUSINESS

     Our most significant market is Brazil, which has periodically experienced
extremely high rates of inflation. Inflation, along with governmental measures
to combat inflation and public speculation about possible future measures, has
had significant negative effects on the Brazilian economy. The annual rates of
inflation, as measured by the National Consumer Price Index (Indice Nacional
de Precos ao Consumidor), have decreased from 2,489.1% in 1993 to 9.4% in
2001. The same index increased to 14.7% in 2002, and decreased to 10.4% in
2003.

     Brazil may experience high levels of inflation in the future. There can
be no assurance that recent lower levels of inflation will continue. Future
governmental actions, including actions to adjust the value of the real, may
trigger increases in inflation. We cannot assure you that inflation will not
affect our business in the future. In addition, the Brazilian government's
actions to maintain economic stability, as well as public speculation about
possible future actions, may contribute significantly to economic uncertainty
in Brazil and to heighten volatility in the Brazilian securities markets and
securities issued abroad by Brazilian issuers.

     The Brazilian currency has devalued periodically during the last four
decades. Throughout this period, the Brazilian government has implemented
various economic plans and utilized a number of exchange rate policies,
including sudden devaluations and periodic mini-devaluations, during which the
frequency of adjustments has ranged from daily to monthly, floating exchange
rate systems, exchange controls and dual exchange rate markets. There have
been significant fluctuations in the exchange rates between Brazilian currency
and the U.S. dollar and other currencies. For example, the U.S. dollar / real
exchange rate depreciated from R$1.9554 per US$1.00 at December 31, 2000 to
R$2.3204 at December 31, 2001 and to R$3.5333 at December 31, 2002. The fear
of exchange controls accelerated the pace of capital flight. The exchange rate
reached R$3.9552 per US$1.00 in October 2002. However, the stability
established by the economic policy initiated by the new government has
restored some confidence in the market. This resulted in an appreciation of
the real in 2003 of 22.3%, resulting in an exchange rate of R$2.8892 per
US$1.00 as of December 31, 2003. We cannot assure you, however, that
devaluations will not impact our business in the future.

     Devaluation of the real relative to the U.S. dollar would create
additional inflationary pressures in Brazil by generally increasing the price
of imported products and requiring recessionary governmental policies to curb
aggregate demand. On the other hand, appreciation of the real against the U.S.
dollar may



                                      12
<PAGE>



lead to a deterioration of the current account and the balance of
payments, as well as dampen export-driven growth. The potential impact of the
floating exchange rate and measures of the Brazilian government aimed at
stabilizing the real is uncertain. In addition, a substantial increase in
inflation may weaken investor confidence in Brazil, impacting our ability to
finance our operations through the international capital markets.


     CONTINUED DECLINES IN THE VALUE OF THE REAL AGAINST THE VALUE OF THE U.S.
DOLLAR HAVE AND MAY CONTINUE TO ADVERSELY AFFECT OUR FINANCIAL PERFORMANCE

     Most of our sales are in reais; however, a significant portion of our
debt is denominated in or indexed to U.S. dollars. In addition, a significant
portion of our operating expenses, in particular those related to packaging
such as aluminum and iron cans and PET bottles, as well as hops and malt are
also denominated in or linked to U.S. dollars. Therefore, the devaluation of
the real increases our financial expenses and operating costs and could affect
our ability to meet our foreign currency obligations. Our current policy is to
hedge substantially all of our dollar-denominated debt against adverse changes
in foreign exchange rates; however, we cannot assure you that such hedging
will be possible at all times in the future.


     INCREASES IN TAXES LEVIED ON BEVERAGE PRODUCTS IN BRAZIL AND HIGH LEVELS
OF TAX EVASION MAY ADVERSELY AFFECT OUR RESULTS AND PROFITABILITY

     Increases in Brazil's already high levels of taxation could adversely
affect our profitability. Increases in taxes on beverage products usually
result in higher beverage prices for consumers. Higher beverage prices
generally result in lower levels of consumption and, therefore, lower net
sales. Lower net sales result in lower margins because some of our costs are
fixed and thus do not vary significantly based on the level of production. We
cannot assure you that the government will not increase current tax levels, at
both state and/or federal levels, and that this will not impact our business.

     In addition, the Brazilian beverage industry experiences high levels of
tax evasion, which is primarily due to the high level of taxes on beverage
products in Brazil. An increase in taxes may lead to an increase in tax
evasion, which could result in unfair pricing practices in the industry. We
have proposed to the federal government regulation requiring the mandatory
installation of flow meters in all Brazilian beer and soft drinks factories in
order to help the federal and state governments fight tax evasion in the



                                      13
<PAGE>


beverage industry. The federal government issued this regulation in 2004 with
respect to the beer industry only and is expected to enact similar regulations
with respect to the carbonated soft-drinks industry by the end of 2004. We
cannot assure you that such regulation will be enacted and have the impact we
expect. Moreover, if such regulation is not enacted we cannot assure you that
our business and results of operations will not be further impacted.


     QUINSA IS SUBJECT TO SUBSTANTIAL RISKS RELATING TO ITS BUSINESS AND
OPERATIONS IN ARGENTINA AND OTHER COUNTRIES IN WHICH IT OPERATES

     On January 31, 2003, we acquired a significant interest in Quinsa. Quinsa
is a brewing company with a substantial portion of its operations in
Argentina. As a result, Quinsa's financial conditions and results of
operations may be adversely affected by Argentine political instability,
fluctuations in the Argentine economy and governmental actions concerning
economy, including:

   o  the imposition of exchange controls;

   o  the devaluation of the Argentine Peso; and

   o  other measures enacted by the Argentine government to address
      Argentina's economic crisis.

     If one or more of the events described above were to occur, we may not be
able to realize the benefits we expect from the acquisition of our interest in
Quinsa, which could adversely impact our business.


     U.S. INVESTORS MAY NOT BE ABLE TO EFFECT SERVICE OF PROCESS UPON, OR TO
ENFORCE JUDGMENTS AGAINST US

     We are organized under the laws of the Federative Republic of Brazil. All
our directors and executive officers and the experts named in this annual
report are residents of countries other than the United States. All or a
substantial portion of the assets of such non-resident persons and of AmBev
are located outside the United States. As a result, it may not be possible for
investors to effect service of process within the United States upon such
persons or AmBev, or to enforce against them in U.S. courts judgments obtained
in such courts based upon civil liability provisions of the Federal securities
laws of the United States or otherwise.


     THE BRAZILIAN GOVERNMENT HAS EXERCISED, AND CONTINUES TO EXERCISE,
SIGNIFICANT INFLUENCE OVER THE BRAZILIAN ECONOMY; BRAZILIAN ECONOMIC AND
POLITICAL CONDITIONS HAVE A DIRECT IMPACT ON OUR BUSINESS

     The Brazilian economy has been characterized by significant involvement
on the part of the Brazilian government, which often changes monetary, credit
and other policies to influence Brazil's economy. The Brazilian government's
actions to control inflation and affect other policies have often involved
wage and price controls, the Central Bank's base interest rates, as well as
other measures, such as the freezing of bank accounts, which occurred in 1990.

     Actions taken by the Brazilian government concerning the economy may have
important effects on Brazilian corporations and other entities, including
AmBev, and on market conditions and prices of Brazilian securities. Our
financial condition and results of operations may be adversely affected by the
following factors and the Brazilian government's response to the following
factors:

   o  devaluations and other exchange rate movements;

   o  inflation;


                                      14
<PAGE>

   o  exchange control policies;

   o  social instability;

   o  price instability;

   o  energy shortages;

   o  interest rates;

   o  liquidity of domestic capital and lending markets;

   o  tax policy; and

   o  other political, diplomatic, social and economic developments in or
      affecting Brazil.


     PENDING TAX REFORM IN BRAZIL MAY INCREASE OUR TAX BURDEN

     On April 30, 2003, President Lula submitted to Congress a bill proposing
a constitutional amendment aimed at a broad tax reform. The bill was mainly
designed to simplify the complex Brazilian fiscal system and reduce tax
evasion and the public deficit. The bill proposes to eliminate the cascading
nature of federal taxes and broaden the discussion for the tax reform.

     The most important changes in the tax reform proposal were to unify the
legislation on the ICMS, IPI and ISS, and to establish five standard tax
rates. In addition, the CPMF, a provisional levy on bank account transactions,
would be replaced by a permanent federal tax on financial transfers. The House
of Representatives voted in favor of the main items of the proposed reform in
August 2003.

     The discussion of the unification of the value-added state-level ICMS tax
was postponed and, according to the Government, it is expected to take place
in 2004.

         The effects of these changes and many other  changes that could result
from the enactment of tax reform's  future phases cannot be quantified.  These
changes may reduce our results of  operations,  increase our costs or limit our
profitability, and we may have a higher tax burden if the tax reform bill is
approved and implemented.



     THE PROPOSED CHANGES IN BRAZILIAN LABOR LAW MAY AFFECT LABOR RELATIONS

     Under the new Brazilian federal government which took office in January
2003, new efforts to implement a revision of the Brazilian Labor Law
(Consolidacao das Leis do Trabalho, or CLT) were initiated. According to the
system currently in force, labor relations are strongly regulated. Although
still protecting fundamental labor rights, the committee in charge of the
preparation of a new bill (the "Labor Committee") has proposed to include more
flexibility in the rules regulating labor relations in Brazil, allowing for
employers and employees to negotiate certain aspects of the employment
relations. A revision of union relations in Brazil may also be discussed. It
is not clear whether the proposed changes, if approved by the Congress, would
be well accepted by employees of Brazilian companies, including



                                      15
<PAGE>


AmBev, and their respective unions. These changes, if implemented, may
adversely impact our business in the future. At the end of last year, Congress
approved the proposal to amend the Brazilian Federal Constitution (Proposta de
Emenda Constitucional, or PEC) on the Social Security System reform. However,
the PEC affects public employees only (not AmBev employees) and addresses the
public employees ceiling for retirement benefits, and the retired public
employees contribution to the Social Security System.

     NEW PROPOSED REGULATION ON ALCOHOLIC BEVERAGES MAY ADVERSELY IMPACT OUR
SALES

     There are approximately 90 bills under review by Congress with proposed
regulation on the consumption, sales and marketing of alcoholic beverages,
including beer. Such proposed legislation, if enacted, may impose
restrictions, among other things, on the advertisement of alcoholic beverage
products on television during specified times of the day as well as on the
hours of operation of certain points of sale. It is uncertain whether such
proposed legislation will be approved by Congress. Similar bills have been
submitted to a number of state and city councils in states in which we
operate. In the event Congress or any such state or city councils approve the
proposed legislation, certain restrictions may apply to our business
throughout Brazil, or in certain states or cities within Brazil, as the case
may be. The anti-alcohol regulations, if approved, may adversely impact our
sales. For further information, please refer to "Information on the Company -
AmBev Business Overview - Regulation - General."


                            RISKS RELATING TO AMBEV


     We are subject to Brazilian and other antitrust regulations

          We have a substantial beer market share in Brazil and thus are
subject to regulation under Brazilian antitrust rules. In addition, in
connection with the combination of Brahma and Antarctica, we entered into a
performance agreement with the Brazilian antitrust authorities, pursuant to
which we are subject to certain continuing restrictions over our distribution
network. Also, the proposed Interbrew-AmBev Transactions are undergoing review
by the Brazilian antitrust authorities. For further information on this matter
see "Financial Information - Consolidated Financial Statements and Other
Financial Information - Legal Proceedings - Antitrust matters". We cannot
assure you that such transactions will be approved by the Brazilian antitrust
authorities or that the Brazilian antitrust authorities will not impose
restrictions or conditions in connection with their approval if granted. We
are also party to several antitrust legal proceedings. For further information
on this matter see "Financial Information - Consolidated Financial Statements
and Other Financial Information - Legal Proceedings - Antitrust matters". We
cannot assure you that Brazilian antitrust regulation will not affect our
business in the future.

     AmBev's participation in the Argentine beer market increased
substantially after the acquisition of our interest in Quinsa. Quinsa is
subject to regulation under Argentinean antitrust rules. In addition, AmBev
and Quinsa must comply with the conditions established by the Comision
Nacional de Defensa de la Competencia ("CNDC"), in connection with the
acquisition of our interest in Quinsa. For further information on this matter
see "Information on the Company - AmBev Business Overview - Interest in
Quinsa". We cannot assure you that Argentinean antitrust regulation will not
affect Quinsa's business in the future and therefore impact the benefits that
AmBev anticipates will be generated from this investment.


     HOLDING COMPANY STRUCTURE

     AmBev is a holding company. The guaranty AmBev entered into in connection
with notes issued by Companhia Brasileira de Bebidas ("CBB") is an obligation
which derives substantially all of AmBev's



                                      16
<PAGE>


operating income from its subsidiaries. Accordingly, in paying any amount
under the guaranty, AmBev will rely on income from dividends and other cash
flows from its subsidiaries, as well as dispositions of one or more
subsidiaries or other assets or interests therein. None of AmBev's
subsidiaries have any obligation, contingent or otherwise, to pay amounts due
pursuant to the guaranty or to make funds available, whether in the
form of loans, dividends or otherwise. In general, Brazilian corporations may
pay dividends only out of net income, retained earnings and revenues reserves,
if approved by shareholders, after establishing mandatory legal reserves.
Brazilian Corporate Law requires corporations to allocate 5% of their net
income in each year to a legal reserve until the amount reserved is equal to
20% of paid-in-capital. Additionally, our bylaws mandate that we allocate
35.0% of our net income for dividend distribution. The ability of AmBev's
subsidiaries to pay such dividends or make such distributions will be subject
to, among other things, applicable laws and, under certain circumstances,
restrictions contained in agreements or debt instruments entered into by AmBev
and any of its subsidiaries. In addition, claims of creditors of AmBev's
subsidiaries, including trade creditors, will generally have priority as to
the assets and cash flow of such subsidiaries over AmBev's claims and the
holders of CBB's notes and the guaranty.


                       RISKS RELATING TO OUR SECURITIES


     THE RELATIVE VOLATILITY AND ILLIQUIDITY OF THE BRAZILIAN SECURITIES
MARKETS MAY SUBSTANTIALLY LIMIT YOUR ABILITY TO SELL THE NOTES AT THE PRICE
AND TIME YOU DESIRE

     Investing in securities in emerging markets, such as Brazil, involves
greater risk than investing in securities of issuers from more developed
countries and such investments are generally considered speculative in nature.

     Brazilian investments, such as investments in our securities, are subject
to economic and political risks, involving, among others:

  o changes in the regulatory, tax, economic and political environment that
    may affect the ability of investors to receive payment, in whole or in
    part, in respect of their investments; and

  o restrictions on foreign investment and on repatriation of capital
    invested.

     The Brazilian securities markets are substantially smaller, less liquid,
more concentrated and more volatile than major U.S. and European securities
markets, and are not as highly regulated or supervised as these markets. The
relatively small market capitalization and illiquidity of the Brazilian
securities markets may substantially limit your ability to sell the notes at
the price and time you desire.


      DETERIORATION IN ECONOMIC AND MARKET CONDITIONS IN OTHER EMERGING MARKET
COUNTRIES MAY ADVERSELY AFFECT THE MARKET PRICE OF AMBEV'S SECURITIES

     Economic and market conditions in other emerging market countries,
especially those in Latin America, influence the market for securities issued
by Brazilian companies and investors' perception of economic conditions in
Brazil. Since the fourth quarter of 1997, the international financial markets
experienced significant volatility, and a large number of market indices,
including those in Brazil, declined significantly. For example, the Asian
economic crisis and the 1998 Russian debt moratorium and devaluation of the
Russian currency triggered securities market volatility in Brazil and other
emerging market countries' securities markets. More recently, Argentina has
experienced a financial crisis resulting from its difficulties in servicing
its large outstanding public debt. Venezuela, Uruguay and Paraguay have


                                      17
<PAGE>


also experienced a significant economic downturn. The market value of notes
may therefore be adversely affected by events occurring outside of Brazil,
especially in other emerging market countries.

     OUR CONTROLLING SHAREHOLDERS ARE ABLE TO DETERMINE THE OUTCOME OF MANY
CORPORATE ACTIONS WITHOUT THE APPROVAL OF NON-CONTROLLING SHAREHOLDERS

     The controlling shareholders of AmBev, ECAP, Braco Investimentos S.A. and
the FAHZ together hold approximately 76.78% of AmBev's common shares. In
addition, Marcel Hermann Telles, Jorge Paulo Lemann and Carlos Alberto
Sicupira, who are directors of AmBev, collectively own, indirectly through
Braco Management, an investment company directly controlled by Messrs. Telles,
Lemann and Sicupira, approximately 76.12% of the voting capital of Braco
Investimentos S.A., which, in turn, owns approximately 98.64% of the voting
shares of ECAP. Braco Investimentos S.A. and ECAP together hold approximately
52.60% of the voting common shares of AmBev. Thus, these three directors of
AmBev have significant influence over AmBev, although several types of matters
must be decided in accordance with the AmBev shareholders' agreement. For
further information on this matter see "Major Shareholders and Related Party
Transactions-Major Shareholders-AmBev Shareholders' Agreement".

     In addition, upon consummation of the Interbrew-AmBev Transactions,
Interbrew will hold, directly or indirectly, including through its indirect
ownership interests in Braco Investimentos S.A. and ECAP, shares of AmBev
common stock that will represent approximately 69% of the total voting power
of AmBev's capital stock. Assuming that all minority holders of AmBev common
stock tender their shares in the mandatory tender offer that Interbrew will be
required to launch following the consummation of the Interbrew-AmBev
Transactions, Interbrew's voting interest in AmBev will increase to
approximately 84%. Interbrew will thus have significant influence over
AmBev, even though (i) both Braco Investimentos S.A. and ECAP will remain
subject to the AmBev shareholders' agreement and (ii) Interbrew will be
jointly controlled by its current controlling shareholders and AmBev's current
controlling shareholders, Messrs. Lemann, Sicupira and Telles. For further
information on these matters see "Background on the Company-The
Interbrew-AmBev Transactions" and "Major Shareholders and Related Party
Transactions-Major Shareholders-AmBev Shareholders' Agreement".

     The controlling shareholders are able to elect the majority of the
members of the Board of Directors of AmBev and generally determine the outcome
of other actions requiring the approval of AmBev's shareholders. Under
Brazilian Corporate Law, the protections afforded to non-controlling security
holders and the fiduciary duties of directors may, in some respects, be less
comprehensive than in the United States or other jurisdictions.

     AMBEV SHAREHOLDERS MAY NOT RECEIVE ANY DIVIDENDS.

     According to its current bylaws, AmBev must generally pay its
shareholders 35.0% of its annual net income, as determined and adjusted under
Brazilian GAAP (adjusted income). The main sources for these dividends are
AmBev's operating subsidiaries, principally CBB. Adjusted income may be
capitalized, used to absorb losses or otherwise appropriated as allowed under
Brazilian GAAP; therefore, adjusted income may no longer be available to be
paid as dividends. AmBev might not pay dividends to its shareholders in any
particular fiscal year, upon the determination of the Board of Directors that
such distributions would be inadvisable in view of AmBev's financial
condition. While the law does not establish the circumstances rendering the
payment of dividends inadvisable, it is generally agreed that a company need
not pay dividends if such payment threatens the existence of the company as a
going concern or harms its normal course of operations.

     It is possible, therefore, that shareholders of AmBev will not receive
dividends in any particular fiscal year. Any dividends not distributed would
be allocated to a special reserve account for future payment to shareholders,
unless it is used to offset subsequent losses.


                                      18
<PAGE>


     CONTROLS AND RESTRICTIONS ON FOREIGN CURRENCY REMITTANCE COULD HARM THE
ABILITY OF AMBEV TO TRANSFER DIVIDEND PAYMENTS TO OFF-SHORE INVESTORS

     Brazilian law provides that whenever there is a serious imbalance in
Brazil's balance of payments or reasons to foresee a serious imbalance, the
Brazilian government may impose temporary restrictions on the remittance to
foreign investors of the proceeds of their investments in Brazil. For example,
for approximately six months in 1989 and early 1990 the Brazilian government
froze all dividend and capital repatriations that were owed to foreign equity
investors and held by the Central Bank in order to conserve Brazil's foreign
currency reserves. These amounts were subsequently released in accordance with
Brazilian government directives. Similar measures could be taken by the
Brazilian government in the future.

     As a result, the Brazilian government may in the future restrict
companies such as AmBev from paying amounts denominated in foreign currencies
or require that any such payments be made in Brazilian reais. The likelihood
that the Brazilian government would impose such restrictions may be affected
by the extent of Brazil's foreign currency reserves, the availability of
foreign currency in the foreign exchange markets on the date a payment is due,
the size of Brazil's debt service burden relative to the economy as a whole,
Brazil's policy toward the International Monetary Fund and other factors. We
cannot assure you that the Central Bank will not modify its policies or that
the Brazilian government will not institute restrictions or delays on payments
by Brazilians issuers in respect of securities issued in the international
capital markets to date. For further information on this matter see " -
Exchange Controls".

     IF YOU EXCHANGE THE AMBEV ADSs FOR AMBEV SHARES, YOU RISK LOSING SOME
FOREIGN CURRENCY REMITTANCE AND BRAZILIAN TAX ADVANTAGES

     The AmBev ADSs benefit from the certificate of foreign capital
registration of The Bank of New York (as depositary) in Brazil, which permits
The Bank of New York to convert dividends and other distributions with respect
to the AmBev shares into foreign currency and remit the proceeds abroad. If
you exchange your AmBev ADSs for AmBev shares, you will be entitled to rely on
The Bank of New York's certificate of foreign capital registration for only
five business days from the date of exchange. After this five-day period, you
will not be able to remit abroad non-Brazilian currency unless you obtain your
own certificate of foreign capital registration or you qualify under Brazilian
foreign investment regulations that entitle some investors to buy and sell
shares on Brazilian stock exchanges without obtaining separate certificates of
registration. If you do not qualify under the foreign investment regulations
you will generally be subject to less favorable tax treatment of dividends and
distributions on, and the proceeds from any sale of, the AmBev shares. For a
more complete description of Brazilian restrictions on foreign investments and
the foreign investment regulations, see "Additional Information - Memorandum
and Articles of Association - Restrictions on Foreign Investment" and " - Key
Information Exchange Controls". For a more complete description of Brazilian
tax regulations, see "Additional Information - Taxation - Brazilian Tax
Considerations".

     THE AMBEV ADSs HAVE FEWER AND LESS WELL DEFINED SHAREHOLDERS' RIGHTS AS
COMPARED TO SHAREHOLDERS' RIGHTS OF SIMILAR U.S. COMPANIES

     AmBev's corporate affairs are governed by AmBev's bylaws and Brazilian
Corporate Law, which may differ from the legal principles that would apply to
AmBev if the company were incorporated in a jurisdiction in the United States,
such as Delaware or New York, or in other jurisdictions outside of Brazil. In
addition, your rights or the rights of holders of the AmBev shares and ADSs
under Brazilian Corporate Law to protect your interests relative to actions
taken by AmBev's Board of Directors or controlling shareholders may be fewer
and less well-defined than under the laws of those other jurisdictions outside
of Brazil.



                                      19
<PAGE>


     Although Brazilian law imposes restrictions on insider trading and price
manipulation, the Brazilian securities markets may not be as highly regulated
and supervised as the U.S. securities markets or markets in other
jurisdictions. In addition, rules and policies against self-dealing and
regarding the preservation of shareholder interests may be less well-defined
and enforced in Brazil than in the United States, potentially causing
disadvantages to holders of the AmBev shares and ADSs. Corporate disclosures
may be less complete or informative than what may be expected of a U.S. public
company.

     SOME ENTITLEMENTS ARE NOT AVAILABLE TO U.S. HOLDERS OF AMBEV SHARES AND
     ADSs

     Due to various Brazilian and United States laws and regulations, United
States holders of AmBev shares or ADSs may not be entitled to all of the
rights possessed by Brazilian holders of AmBev shares. For instance, U.S.
holders of AmBev shares may not be able to exercise any preemptive or
preferential rights relating to their shares unless a registration statement
under the Securities Act is effective with respect to such rights or an
exemption from the registration requirements thereunder is available.


                 RISKS RELATING TO THE NOTES AND THE GUARANTY


     POSSIBLE EXTENSION OF THE EXPECTED MATURITY OF THE NOTES

     Under the terms of the notes and the indentures, if, on the expected
maturity date for the notes, the insurance policy is in effect or certain
funds are on deposit in the reserve account and certain specified events have
occurred and are continuing relating to the imposition of currency exchange
controls in Brazil, the date for the repayment of the notes will automatically
be extended until the earlier to occur of (i) twenty-four calendar months from
the expected maturity date; (ii) the latest date for which funds are available
in the reserve account or under the letter of credit and under the insurance
policy to pay interest on the notes; or (iii) the thirtieth day after any such
currency exchange control event has ended. Accordingly, you should not rely,
in making your investment decision, on receiving repayment in full of the
notes on the initial expected maturity date.

     Any such extension of the expected maturity date could, depending on
changes in the financial conditions of CBB, ultimately affect the ability of
the noteholders to receive all amounts due to them under such international
notes and the related international indentures.


     POSSIBLE LIMITATIONS OF AMBEV's OBLIGATIONS UNDER THE GUARANTY

     AmBev entered into a guaranty in support of the issuer's obligation under
the notes and the indenture. Our obligation to guarantee the payment of
amounts of principal, interest or other amounts due under the notes and the
indenture applies, subject to some limitations, irrespective of whether any
such amounts are due at maturity of the notes or otherwise.

     AmBev has the right under certain limited circumstances to defer making
payments required under the guaranty for a period of up to twenty-four months.
In such event, noteholders will be required to wait until the end of such
deferral or suspension period to receive payment on the notes. We cannot
assure you that AmBev will not experience financial difficulties during such
period or whether at the end of such period that it will be able to make any
or all required payments under the guaranty.



                                      20
<PAGE>



     JUDGMENTS OF BRAZILIAN COURTS ENFORCING OUR OBLIGATIONS UNDER THE NOTES,
THE INDENTURE OR THE GUARANTY WOULD BE PAYABLE ONLY IN REAIS

     If proceedings were brought in Brazil seeking to enforce our obligations
under the notes, the indenture, or the guaranty, we would not be required to
discharge our obligations in a currency other than reais. Under the Brazilian
exchange control limitations, an obligation to pay amounts denominated in a
currency other than Brazilian currency, which is payable in Brazil, may only
be satisfied in Brazilian currency at the rate of exchange, as determined by
the Central Bank, in effect on the date of payment.


     A FINDING THAT THE GUARANTY EXECUTED BY AMBEV WAS A FRAUDULENT CONVEYANCE
COULD RESULT IN NOTEHOLDERS LOSING THEIR LEGAL CLAIM AGAINST AMBEV

     The issuer's obligation to make payments on the notes is supported by
AmBev's obligation under the guaranty to guarantee payments by CBB on the
notes. AmBev has been advised by Cravath, Swaine & Moore LLP, its United
States counsel, that the guaranty is valid and enforceable in accordance with
the laws of the State of New York. AmBev has been advised by its Brazilian
legal counsel that the guaranty has been duly authorized under the laws of
Brazil and is valid, binding and enforceable against AmBev in accordance with
its terms. In the event that U.S. federal or state fraudulent conveyance or
similar laws are applied to the guaranty, and the guarantor, at the time it
entered into the guaranty:

  o was or is insolvent or rendered insolvent by reason of its entry into the
    guaranty;

  o was or is engaged in business or transactions for which the assets
    remaining with AmBev constituted unreasonably small capital; or

  o intended or intends to incur, or believed or believes that it would incur,
    debts beyond its ability to pay such debts as they mature; and

  o received or receives less than reasonably equivalent value or fair
    consideration therefore,

then the obligations of AmBev under the guaranty could be avoided, or claims
in respect of the guaranty could be subordinated to the claims of other
creditors. Among other things, a legal challenge to the guaranty on
fraudulent conveyance grounds may focus on the benefits, if any, realized by
AmBev as a result of CBB's issuance of these notes. To the extent that the
guaranty is held to be a fraudulent conveyance or unenforceable for any other
reason, the holders of the notes would not have a claim against AmBev under
the guaranty and will solely have a claim against CBB. We cannot assure you
that, after providing for all prior claims, there will be sufficient assets to
satisfy the claims of the noteholders relating to any avoided portion of the
guaranty.




                                      21
<PAGE>


     CONTROLS AND RESTRICTIONS ON FOREIGN CURRENCY REMITTANCE COULD IMPEDE OUR
ABILITY TO MAKE PAYMENTS UNDER THE NOTES AND THE GUARANTY

     Brazilian law provides that whenever there is a serious imbalance in
Brazil's balance of payments or reasons to foresee a serious imbalance, the
Brazilian government may impose temporary restrictions on the remittance to
foreign investors of the proceeds of their investments in Brazil. For example,
for approximately six months in 1989 and early 1990 the Brazilian government
froze all dividend and capital repatriations that were owed to foreign equity
investors and held by the Central Bank in order to conserve Brazil's foreign
currency reserves. These amounts were subsequently released in accordance with
Brazilian government directives. Similar measures could be taken by the
Brazilian government in the future.

     As a result, the Brazilian government may in the future (i) restrict
companies such as CBB and AmBev from paying amounts denominated in foreign
currencies (such as the notes and the guaranty) or (ii) require that any such
payments be made in reais. The likelihood that the Brazilian government would
impose such restrictions may be affected by the extent of Brazil's foreign
currency reserves, the availability of foreign currency in the foreign
exchange markets on the date a payment is due, the size of Brazil's debt
service burden relative to the economy as a whole, Brazil's policy toward the
International Monetary Fund, and other factors. We cannot assure you that the
Central Bank will not modify its policies or that the Brazilian government
will not institute restrictions or delays on payments of external debt.

     The Brazilian government currently restricts the ability of Brazilian or
foreign persons or entities to convert Brazilian currency into U.S. dollars or
other currencies, other than in connection with certain authorized
transactions including, among others, timely payments by CBB on the notes and
payments by AmBev under the guaranty. We cannot assure you that mechanisms for
the transfer of reais and conversion into U.S. dollars will continue to be
available at the time we are required to perform our obligations under the
notes and the guaranty or that a more restrictive control policy, which could
affect our ability to make payments under the notes and the guaranty in U.S.
dollars, will not be instituted in the future. If such financial mechanisms
are not available, we will have to rely on a special authorization from the
Central Bank to make payments under the notes and the guaranty in U.S.
dollars. We cannot assure you that any such Central Bank approval would be
obtained or that such approval would be obtained on a timely basis.

     In the event that no such additional authorizations are obtained or
obtainable from the Central Bank for the payment by CBB or AmBev of amounts
owed under the indenture, the notes or the guaranty, as the case may be, CBB
or AmBev may be able to lawfully pay the amounts due under the notes or the
guaranty through an international transfer of reais. Through the international
transfer of reais mechanism,



                                      22
<PAGE>


payments made in reais by CBB or AmBev will be deposited in non-resident
accounts held by foreign financial institutions, which would then purchase
U.S. dollars through the floating market, as defined in " - Exchange Rate
Information" and " - Exchange Controls", and remit U.S. dollars to the
relevant agent for payment of the notes. No assurance can be given that the
international transfer of reais or the floating market will remain legally or
commercially available to Brazilian residents.

     As of February 1, 1999, the floating market and commercial market were
unified and Brazilian banks adopted the same rates, leading to a convergence
in the pricing and liquidity of both markets. Consequently, while there is
still a regulatory distinction between the two markets, as of the date of this
annual report, there is no practical distinction between the commercial market
and the floating market.



     BOOK-ENTRY REGISTRATION

     Because transfers and pledges of global notes can be effected only
through book entries at the Depositary Trust Company ("DTC"), the liquidity of
any secondary market for global notes may be reduced to the extent that some
investors are unwilling to hold notes in book-entry form in the name of a DTC
participant. The ability to pledge global notes may be limited due to the lack
of a physical certificate. Beneficial owners of global notes may, in certain
cases, experience delay in the receipt of payments of principal and interest
since such payments will be forwarded by the paying agent to DTC who will then
forward payment to the respective DTC participants, who will thereafter
forward payment directly, or indirectly through Euroclear or Clearstream, to
beneficial owners of the global notes. In the event of the insolvency of DTC
or of a DTC participant in whose name global notes are recorded, the ability
of beneficial owners to obtain timely payment and (if the limits of applicable
insurance coverage by the Securities Investor Protection Corporation are
exceeded, or if such coverage is otherwise unavailable) ultimate payment of
principal and interest on global notes may be impaired.



     SUBORDINATION TO CERTAIN STATUTORY LIABILITIES

     Under Brazilian law, our obligations under the guaranty, the notes and
the indenture are subordinated to certain statutory preferences. In the event
of our bankruptcy, such statutory preferences, such as claims for salaries,
wages, social security and other taxes, court fees and expenses, will have
preference over any other claims, including claims by any investor in respect
of the guaranty.


     POSSIBLE VOLUNTARY CANCELLATION OF THE INSURANCE POLICY AND THE LETTER OF
CREDIT AND REFUNDING OF AMOUNTS ON DEPOSIT IN THE RESERVE ACCOUNT

     Subject to certain conditions precedent relating to the rating of the
notes, CBB may request the trustee to cancel the insurance policy, refund all
amounts on deposit in the reserve account and allow the letter of credit to be
cancelled after the third anniversary of the closing date. Any such
cancellation and


                                      23
<PAGE>


withdrawal may significantly affect the ability of noteholders to receive
payments under their notes during a currency exchange control event occurring
after any such cancellation, withdrawal and refund.


     CROSS-DEFAULT CLAUSES

     As a consequence of a change in control, BNDES may accelerate their
outstanding loans to AmBev. If they do, noteholders would have the right to
request acceleration of the notes. To date there has not been a change of
control, and BNDES does not yet have the right to accelerate the indebtedness.
We have requested a waiver of this provision from BNDES in connection with the
Interbrew-AmBev Transactions.

                    RISKS RELATING TO THE INSURANCE POLICY


      LIMITED FINANCIAL INFORMATION CONCERNING THE INSURER

      The rating of the notes is in part based on the availability of the
insurance policy to cover certain risks related to inconvertibility or
non-transferability of amounts which may be paid by the issuer and the
guarantor under the indenture, the notes and the guaranty in the event that
the Brazilian government imposes limitations on the conversion of reais to
U.S. dollars. No financial information concerning the insurer is included in
this annual report and statutory financial statements are available from the
Delaware insurance authorities. The insurer's financial obligations are
subject to pooling arrangements with its parent and certain of its affiliates,
which arrangements depend on the financial condition of these entities. No
financial information concerning these entities is included herein. Any
decline in the financial condition of the insurer or any of these companies
may impair the ability of the insurer to pay claims under the insurance policy
and could result in a downgrade of the rating of the notes.


     LIMITATION ON AMOUNT OF COVERAGE UNDER THE INSURANCE POLICY

     The insurance policy has a policy payment limit in U.S. dollars which
corresponds to the amount of scheduled interest due on the notes for eighteen
months. Combined with the amounts on deposit in a reserve account or available
under the letter of credit, the amounts available to the trustee from the
insurance policy should be sufficient to cover the payment of interest due on
the notes for up to four interest payment periods. If for any reason any
currency exchange control event were to continue for a period longer than
twenty-four months (four consecutive interest payment periods) during which
time CBB or AmBev would otherwise be required to make payments to the trustee
on behalf of the noteholders under the notes or the guaranty, a default may
occur on the notes. In such cases, noteholders may, in certain circumstances
be required to accept reais in satisfaction of the CBB's and AmBev's
obligation to make payments to the trustee under the notes and the guaranty
regardless of whether such reais are then convertible into U.S. dollars or any
other currency. See "- Risks Relating to the Notes and the Guaranty -
Judgments of Brazilian courts enforcing our obligations under the notes, the
indenture or the guaranty would be payable only in reais".


     CONDITIONAL NATURE OF THE INSURER'S OBLIGATION TO PAY UNDER THE INSURANCE
POLICY

      The insurer's obligation to make payments under the insurance policy is
subject to certain conditions, limitations and exclusions including, but not
limited to:



                                      24
<PAGE>


  o the requirement that CBB or AmBev generally either attempt and fail to
    convert reais to U.S. dollars or attempt and fail to transfer U.S. dollars
    from Brazil to the trustee in New York;

  o certain events causing the failure of CBB to pay under the indenture or
    AmBev to pay under the guaranty, as the case may be, continuing for the
    entire 180 calendar-day waiting period under the insurance policy;

  o the filing by the trustee, as the insured party under the insurance
    policy, of a claim with the insurer; and

  o the provision of certain information by the trustee, CBB and AmBev to the
    insurer within the time periods proscribed by the insurance policy in
    connection with the filing of the claim with the insurer.

     The failure to satisfy any such condition, if not waived by the insurer,
may result in the insurer not being obligated to make any payment on the
insurance policy.

     In addition, the insurer may in certain circumstances cancel the
insurance policy, exclude the payment of a claim thereunder and adjust the
amount of a claim under the insurance policy.


     LIMITATION ON TIMING OF PAYMENTS UNDER THE INSURANCE POLICY

     The insurance policy requires that the insurer make payments in respect
of a claim thereunder 180 days after the original payment schedule for
principal of, and interest on, the notes. Accordingly, in the event of an
acceleration of the notes prior to the maturity thereof during certain events,
the insurer will not be obligated to make such payments in the event of any
such acceleration.


           RISKS RELATED TO THE PROPOSED INTERBREW-AMBEV TRANSACTION

THERE MAY BE UNFORESEEN COSTS AND DIFFICULTIES ASSOCIATED WITH THE INTEGRATION
                                  OF LABATT

     The proposed Incorporacao transaction will involve the integration of two
companies, AmBev and Labatt, that have previously operated within different
organizational structures, markets and geographic regions. While we have
identified certain potential synergies and cost savings that we believe may be
realizable following the completion of the transaction, there can be no
assurance that such potential synergies and cost savings will be realized in
the near future, if at all. Labatt operates in a market and geographic region
that has different characteristics from the markets and regions in which we
have historically operated, and as a result, we may encounter unexpected
challenges and problems in the management and operation of the Labatt
business. Accordingly, there can be no assurance that substantial expenses and
delays will not be incurred in the course of the integration. The process of
coordinating and integrating the acquisition could interrupt or interfere with
the ordinary operations of the businesses. Any major difficulties encountered
in the integration of the businesses could have a material adverse effect on
our business, financial condition and results of operation.

THE CONSUMMATION OF THE PROPOSED TRANSACTION IS SUBJECT TO THE SATISFACTION OF
VARIOUS CONDITIONS AND ANY FAILURE OR DELAY IN THE SATISFACTION OF THOSE
CONDITIONS COULD DELAY AND POSSIBLY PREVENT THE CONSUMMATION OF THE
TRANSACTION.

     The consummation of the proposed Interbrew-AmBev Transactions is subject
to the satisfaction of various conditions, including the receipt of approval


                                      25
<PAGE>


of the Brazilian Central Bank. Any failure or delay in the satisfaction of those
conditions will delay and possibly prevent the consummation of the
transaction.


                                      26
<PAGE>



INFORMATION ON THE COMPANY



                     BRAZILIAN BEVERAGE INDUSTRY OVERVIEW



     THE MARKET

     Brazil has a current population of approximately 177 million and 3.3
million square miles of territory. According to the Brazilian Institute of
Geography and Statistics (IBGE), the Brazilian economy contracted by 0.2% in
2003. The Brazilian beer market is the fourth largest in the world and the
largest in Latin America, with annual consumption of 85 million hectoliters in
2003, according to Euromonitor. The Brazilian soft drinks market, 130 million
hectoliters of consumption in 2002, is the third largest in the world
according to PepsiCo1. According to the most recent research of IBGE, the
Brazilian market has a large and youthful consumer base, with 38.1% of the
Brazilian population under the age of 18. These factors, together with the
effects of an unequal regional income distribution, present significant
opportunities for growth in the Brazilian beverage market, especially if
considered that beer and soft drink consumption is at relative low levels, at
49 liters per capita per year for beer, according to Euromonitor, and 66
liters per capita per year for soft drinks, according to PepsiCo.


     POLITICAL AND ECONOMIC ENVIRONMENT

     The political and economic environment in Brazil has and will continue to
have a significant effect on the profitability of Brazilian beverage
producers. The Brazilian economy experienced rapid growth immediately
following the introduction of the Real Plan in July 1994, particularly in the
consumer sector. The Real Plan succeeded in lowering inflation and stimulating
growth. However, by late 1998, the Brazilian economy's growth had slowed, and
was aggravated by a significant currency devaluation in January 1999. Gross
domestic product (GDP) grew at rates of only 0.1% and 0.8% in 1998 and 1999,
respectively. The economic slowdown resulted in generally flat demand in the
Brazilian beverage industry from 1996 through 1999. Renewed consumer
confidence in 1999 and 2000 resulted in GDP growth of 4.4% in 2000. Energy
rationing caused by water shortages in 2000 and 2001 and the political and
economic crisis in Argentina, which accelerated during the second half of
2001, had an adverse effect on market confidence and consumer spending. These
factors together with the global economic slowdown and the events of September
11, 2001 in the United States, contributed to the reduction in economic growth
in Brazil to 1.4% in 2001.

     At the end of 2002, Brazil elected a new president from the Workers
Party, Luiz Inacio Lula da Silva. In the period leading up to, and subsequent
to, his election, there was substantial uncertainty relating to the policies
that the new government would pursue, including the potential implementation
of macro-economic policies that differed significantly from those of the prior
administration. This uncertainty resulted in a loss of confidence in the
Brazilian capital markets, including the steady devaluation of the real
against the U.S. dollar in that period. In 2002 GDP grew by 1.5%, according to
IBGE.

     In January 2003, when the new government took office, it focused on
building credibility and reversing the economic damage stemming from concerns
regarding the policies the new government would pursue. As a result,
macroeconomic policy dominated the agenda in 2003. The two cornerstones of the
new government's economic policy were the endorsement of the International
Monetary Fund (IMF) program agreed to by the previous administration in August
2002 and the announcement of inflation targets for 2003. These initiatives
were followed by an increase in the primary surplus of the public sector to
4.25% of GDP (from 3.75% under the IMF program) and a sharp increase in
interest rates by the Central Bank. Through these actions, the Lula
administration made clear its commitment to reduce the burden of domestic

------------------------
1    PepsiCo has not yet released market information for the 2003 calendar
     year. We have therefore based our market analysis on 2002 information for
     soft drinks.


                                      27
<PAGE>


public debt and reverse inflationary expectations. As a result, macroeconomic
economic indicators improved during 2003. The economy has continued to improve
slightly during the first five months of 2004. During the first three months
of 2004, GDP increased by 2.7% over the same period in 2003. Comparing the
first and the last quarter of 2003, the annualized rate of inflation fell from
23% to 3%, and inflationary expectations for 2004 are close to the government
target rates. In addition, the real appreciated 22.3% during the year.

     Recently, in April 2004, statements from the Federal Reserve Bank of the
United States regarding a potential increase in interest rates, in combination
with other factors, caused a depreciation of the real. The impact may have a
negative effect on the Brazilian capital markets as well as the level of
consumer spending.



     THE BRAZILIAN BEER MARKET

     Fourth Largest Market in the World


     Brazil is the fourth largest beer market in the world and the first in
Latin America in terms of consumption, according to Euromonitor. The following
table shows the ranking of beer consumption per country in selected markets in
2003:


COUNTRY                                             2003 ANNUAL CONSUMPTION
-------------                                     ----------------------------
                                                   (millions of hectoliters)

China.............................................            260
United States.....................................            239
Germany...........................................            97
Brazil............................................            85
Mexico............................................            52
Canada............................................            22
Venezuela.........................................            14
Argentina.........................................            14

--------------------
Source: Euromonitor International, Inc. "World Market for Beer Report, 2003"


     Low Per Capita Beer Consumption

     Beer is the second most popular drink category in Brazil after soft
drinks. However, per capita beer consumption in Brazil is relatively low
compared to many other large markets, mainly due to the unequal regional
income distribution among the Brazilian population. Per capita consumption of
beer has been relatively stable since 1995 despite declines in real wages and
attempts to access the lower income segments of the population. Per capita
consumption of beer in Brazil was approximately 48.8 liters per year in 2003,
and ranks 29th in the world, according to Euromonitor. The following table
sets forth the world ranking in terms of per capita beer consumption in
selected countries in 2003:



                                      28
<PAGE>



COUNTRY                                         2003 LITERS PER PERSON / YEAR
----------------                                -------------------------------
Germany........................................              119
United States..................................               85
Canada.........................................               71
Venezuela......................................               54
Mexico.........................................               50
Brazil.........................................               49
Argentina......................................               37

-----------------------
Source: Euromonitor International, Inc. "World Market for Beer Report, 2003"


     Channels

     Brazilian beer sales are distributed through several points of sales. We
serve approximately one million points of sale. On-premise sales, particularly
through bars and restaurants, dominate the market and have the highest
margins. Off-premise sales, mainly through supermarkets, are highly
price-sensitive, with cans as the predominant packaging through this channel.
Channel mix has been stable in the last few years, with supermarkets
representing approximately 30.1% of the market in 2003, according to
ACNielsen.

     Prevalence of Returnable Packaging

     The main packaging in bars and restaurants are 600 ml returnable bottles.
According to ACNielsen, they represented approximately 67.7% of beer sales in
2003, with the remaining 32.3% consisting of sales of one-way packaging,
including non-returnable bottles and cans, sold mainly in supermarkets.
Because on-premise beer sales are typically delivered in returnable bottles,
the capital expenditures and the commitments necessary to develop an efficient
bottling operation remain a significant barrier to entry in the Brazilian
beverage industry.

     Pricing

     Wholesale and retail prices of beer have not been regulated in Brazil
since July 1990, when formal governmental price controls were lifted. Beer
sales volume is heavily influenced by pricing. Key factors used in determining
retail price for beer include brand preference, national and/or local price
promotions offered by producers, whether consumption takes place on or
off-premise, product category, whether the packaging is returnable or
non-returnable, the desired profit margins and the geographical location of
the retailer.

     The following table shows our estimate of the breakdown of the average
retail price of beer paid by Brazilian consumers for our products in 2003:

                                               YEAR ENDED DECEMBER 31, 2003
                                             -----------------------------------
                                                (Industry Margin Pool - %)

Producers...............................                   31%
Distributors............................                   10%
Retailers...............................                   32%
Taxes...................................                   27%
                                         ---------------------------------------
Total...................................                   100%

---------------------------
Source: Company Estimates



                                      29
<PAGE>



     Seasonality

     Sales of beer in Brazil and AmBev's other principal markets are seasonal,
with stronger sales in the early summer. This is demonstrated by the following
table, which sets forth our sales by quarter in Brazil for the years
indicated:

                                                YEAR ENDED DECEMBER 31,
                                    -----------------------------------------
                                     2003      2002        2001      2000(1)
                                    ------    ------      ------    ---------
                                             (millions of hectoliters)

First quarter......................  14.1      13.3        15.2        14.3
Second quarter.....................  13.1      12.9        13.1        13.0
Third quarter......................  12.0      13.6        13.3        13.7
Fourth quarter.....................  16.1      18.2        17.4        18.2
                                    ------    ------      ------      ------
Total..............................  55.3      58.0        59.0        59.2
                                    ======    ======      ======      ======

---------------------
Source: Company figures.

Amounts may not add due to rounding.

(1)  Includes Antarctica sales and excludes sales of Bavaria.

     Our fiscal and accounting year-end falls in the middle of the Brazilian
and South American summer. As a result of increased consumer demand at this
time, our working capital is seasonally inflated. Certain key global
competitors with operations predominantly within the Northern hemisphere, who
also have December year-ends, typically experience below annual average
consumption patterns at that time. Their working capital trends will therefore
be affected inversely.

     Taxation

     Brazilian beverage producers operate in a relatively unfavorable tax
environment, which results in higher beverage prices to consumers. In 2003,
the average excise and value added taxes (IPI and ICMS) applicable to sale of
beer paid by Brazilian beer producers, distributors and retailers is estimated
to equal 77% of AmBev's net sales.

     Brazilian taxes on beer products include:

   o IPI - a federal excise tax imposed on industrialized products. IPI is
     calculated based on a fixed amount over units sold, varying depending on
     the size and packaging of the product, and levied based on "Free on
     Board" ("FOB") sales price of the product.

   o ICMS - a state value added tax. In the beverage industry, the producer
     has the obligation of collecting the distributor's and the retailer's
     tax debt portion. The ICMS is package-specific in 21 out the 27
     Brazilian states, varies depending on size, and is levied based on a tax
     rate applied to the consumer price with a different tax rate in each
     state.

   o PIS/COFINS - Prior to December 2002, in compliance with Law 10,637/02, the
     federally levied PIS and COFINS taxes were charged over gross revenues
     with two rates of 0.65% and 3.00%, respectively. Since December 2002, a
     new PIS taxation mechanism has been implemented. As a result, PIS is now
     charged as a value added tax, and the rate increased from 0.65 to 1.65%.
     According to this new taxation mechanism, taxpayers may recognize PIS
     credits corresponding to 1.65% over certain costs and expenses. Those
     credits can be used to reduce the PIS due on taxable revenues.

     Similarly, in December 2003, in compliance with Law 10,833/03, the
same taxation mechanism was implemented for COFINS taxation. This law
increased the tax rate for COFINS from 3.00 to 7.60%, and allowed the
recognition of tax credits corresponding to 7.60% over certain costs and
expenses. The law also established specific PIS/COFINS taxation on soda, water
and beer, in which producers are responsible for the whole chain of PIS/COFINS
collection (monophase taxation).


                                      30


<PAGE>



     New legislation enacted on December 29, 2003 also provided for a
specified PIS/COFINS tax on soda, water and beer for which product producers
bear responsibility for collection throughout the supply chain (monophase
taxation). In this system, the PIS and COFINS are calculated based on the
producer's gross revenue by applying, respectively, a 2.5% and 11.9% tax rate.
The new legislation also gives soda, water and beer producers the right to
adopt a "special regime" in which products are taxed on a fixed amount based
on volumes sold.

     As we adopted the special regime for PIS/COFINS, the following new tax
rates are applicable:


  o  Beer: PIS=R$0.0202/litre and COFINS=R$0.0935/litre

  o  Soda and Water: PIS=R$0.0117/litre and COFINS=R$0.0539/litre

     To partially mitigate these high tax rates, many states in Brazil offer
attractive sales tax deferral programs to attract investments to their
regions. See "Operating and Financial Review and Prospects - Sales tax
deferrals and other tax credits" and "Key Information - Risk Factors - The
pending tax reform in Brazil may increase our tax burden".


         THE BRAZILIAN SOFT DRINK MARKET

         Third Largest Market in the World.

     Brazil's soft drink market is currently the second largest in Latin
America and the third largest in the world in terms of sales volume, with
approximately 130 million hectoliters sold in 2002, according to PepsiCo. The
following table shows estimated soft drink consumption in selected countries
in 2002:

COUNTRY                        ANNUAL CONSUMPTION         ANNUAL CONSUMPTION
----------                 --------------------------  ------------------------
                            (millions of hectoliters)  (millions of 8 oz. cases)

United States..............            549                       9,672
Mexico.....................            147                       2,594
Brazil.....................            130                       2,298
Germany....................            73                        1,287
Great Britain..............            57                          998
China......................            54                          954

------------------
Source: PepsiCo


     Soft Drinks Consumption

     Brazilian soft drink consumption grew considerably in the 1990s but has
remained relatively stable in recent years, according to ACNielsen. For the
same demographic reasons as for beer consumption, per capita consumption of
soft drinks remains low at 74.8 liters in 2002, according to PepsiCo. The
following table, which shows per capita consumption in selected countries in
2002, demonstrates that Brazil's per capita consumption remains relatively
low:




                                      31
<PAGE>


                                                      LITERS PER PERSON /
  COUNTRY                                                    YEAR
  --------------                                     ----------------------

United States.....................................          189.9
Mexico............................................          145.0
Great Britain.....................................           95.2
Germany...........................................           89.4
Brazil............................................           74.8
China.............................................            4.2

-------------------
Source: PepsiCo


     Flavors

     The Brazilian soft drinks market is primarily composed of colas and
flavored soft drinks. The principal competitor of the colas is Guarana, a
Brazilian soft drink based on a tropical berry-like fruit that grows in the
Amazon rainforest. The flavors segment has grown significantly in market share
in recent years, mainly due to low price producers, called B-Brands. Since
1999, the market has successfully developed strategies to halt the growth of
B-Brands, including pricing policies and advertising. New flavors such as
apple, citrus and strawberry have also been introduced in the previous years
by low price producers. In 2002, the Coca-Cola Company launched a line of
flavored beverages using the Fanta brand which includes apple and citrus
flavors. In 2003, this line was further extended with the addition of a
strawberry flavored beverage.

     The following table sets forth the percentage of total carbonated soft
drink sales volume by flavor in Brazil during the periods indicated:

                                              YEAR ENDED DECEMBER 31,
                                  ---------------------------------------------
                                   2003      2002      2001     2000      1999
                                  ------    ------    ------   ------    ------
                                           (Flavor Market Share - %)

Guarana........................... 26.4      27.7      28.3     28.1      29.2
Cola.............................. 46.6      44.3      43.9     42.9      42.3
Others............................ 27.0      28.0      27.8     29.0      28.5

--------------------
Source: AC Nielsen


     Packaging

     Non-returnable packaging, such as cans and plastic bottles (PET), are the
principal containers used in the Brazilian soft drink market, representing
approximately 89.8% of the packaging used for soft drinks in 2003. The
introduction of plastic bottles, specifically the 2-liter PET, has been the
principal innovating factor in the sector in the last 10 years, decreasing the
price per liter and facilitating the entry and development of new regional
low-price competitors, which together represented approximately one third of
the total market in 2003. While the introduction of non-returnable packaging
required relatively low investments for the development of an efficient
bottling operation and distribution network, resulting in consumption
increase, it is also a less profitable type of packaging, resulting in lower
industry margins. In 2003 the Coca-Cola Company launched new types of
non-returnable packaging, such as the 3-liter PET non-returnable bottle. This
initiative appears to be aimed at reducing the B-brands' market share by
encouraging the consumption of returnable family size glass bottles, which are
comparably priced or even cheaper than B-Brands' 2-liter PET non-returnable
packs.


                                      32
<PAGE>



     Channels

     Due to the price-sensitivity of the market in soft drinks, and the shift
in packaging presentation toward low cost non-returnable plastic bottles, the
channels through which soft drinks are sold in Brazil have also shifted toward
off-premise (mainly supermarkets) channels. According to ACNielsen, in 2003
approximately 24.3% of Brazilian soft drink sales were made on-premise (bars
and restaurants), with the remaining 75.7% being off-premise, predominantly in
supermarkets.

     Pricing

     There have been no government-imposed price controls on the wholesale or
retail prices of soft drinks since 1990. AmBev's pricing strategy has been and
will continue to be to narrow the price gap between our brands and the market
leader brands, through initiatives to improve our revenue management.

     The following table shows our estimate of the breakdown of the average
retail price of soft drinks paid by Brazilian consumers for our products in
2002:

                                                  YEAR ENDED DECEMBER 31, 2003
                                                -------------------------------
                                                   (Industry Margin Pool - %)

Producers........................................            34.6%
Distributors.....................................             9.4%
Retailers........................................            34.8%
Taxes............................................            21.2%
                                                -------------------------------
Total............................................             100%

----------------
Source:  AmBev


     Seasonality

     As with beer, soft drink sales in Brazil and in AmBev's other principal
markets are seasonal, although seasonal variations in soft drink sales tend
not to be as strong as seasonal variations in beer sales. The following table
sets forth AmBev's soft drink quarterly sales for the years indicated in
Brazil:

                                                  YEAR ENDED DECEMBER 31,
                                        ----------------------------------------
                                         2003      2002      2001       2000(1)
                                        ------    ------    ------     --------
                                                 (Millions of hectoliters)

First quarter............................  4.2       4.4       4.7        4.1
Second quarter...........................  4.1       4.1       4.0        3.7
Third quarter............................  4.0       4.0       4.4        3.9
Fourth quarter...........................  5.4       5.7       5.4        5.3
                                          -------------------------------------
Total.................................... 17.7      18.2      18.5        17.1
                                          =====================================

-------------------
Source:  AmBev
(1) Includes Brahma and Antarctica sales.

     Taxation

     As is the case with beer sales, sales of soft drinks in Brazil are
subject to a high level of taxation, which results in substantially higher
prices to consumers. See "Information on the Company - The Brazilian Beer
Market - Taxation." The overall level of taxation in soft drinks is similar to
beer, however,


                                      33
<PAGE>


the IPI rate on soft drinks that contain natural fruit juice or vegetable
extract is reduced by 50%. In 2003, the average excise and value-added taxes
(IPI and ICMS) applicable to soft drink sales paid by producers, distributors
and retailers in Brazil is estimated to equal approximately 55% of AmBev's net
sales.


     THE BRAZILIAN NON-ALCOHOLIC AND NON-CARBONATED BEVERAGES (NANC) MARKET

     NANC consumption

     The Brazilian NANC market consists primarily of powdered juice, bottled
water, concentrated juice, ready-to-drink (RTD) juice, RTD tea, isotonic sport
drinks, energy drinks and coconut water, both natural and industrialized. The
Brazilian NANC market (excluding coconut water) has grown at an annual
compounded rate of 9.7% per year from 1999 to 2003, according to ACNielsen.
This, however, still represents less than half of the Brazilian soft drink
market. The following table sets forth the estimated consumption, by category,
in Brazil, during the periods indicated:

<TABLE>
<CAPTION>


                                                                        YEARS ENDED DECEMBER 31,
                                                        2003         2002         2001        2000         1999
                                                                       (Millions of hectoliters)
<S>                                                     <C>          <C>          <C>        <C>           <C>
Bottled Water................................           15.5         12.5         11.1        10.0          9.6
Ready-to-drink teas..........................            0.5          0.5          0.4         0.4          0.3
Isotonic sports drinks.......................            0.3          0.3          0.3         0.3          0.4
Powdered juice...............................           24.3         21.5         18.8        17.0         16.5
Concentrated juice ..........................            5.4          6.2          5.8         5.7          5.5
Ready-to-drink juice.........................            1.8          1.6          1.2         0.8          0.7
Energy drinks................................            0.04         0.05         0.04        0.01(1)        -

Total........................................           47.8         42.6         37.6        34.2         33.0

---------------------
Source: ACNielsen

(1)  Energy drinks' volume in 2000 represents only the period from May to
     December; from 2001 on the volumes represent the full year.

</TABLE>


     Seasonality

     As with beer and soft drink sales in Brazil, NANC sales are seasonal. The
patterns of seasonality for NANC are similar to those of beer. The following
table sets forth our quarterly sales volumes in Brazil for the years indicated
in thousands of hectoliters:

                                                       YEAR ENDED DECEMBER 31,
                                          2003       2002        2001      2000
                                          -----     ------      ------    ------
                                                 (thousands of hectoliters)

First quarter...........................  382        433         225       140
Second quarter..........................  273        319         159       111
Third quarter...........................  236        277         187       114
Fourth quarter..........................  211        404         271       194
Total................................... 1,101      1,434        842       560

--------------------
Source: AmBev




                                      34
<PAGE>




                            AMBEV BUSINESS OVERVIEW



     HISTORY AND DEVELOPMENT OF THE COMPANY

     See "Background on the Company - History and Development of the Company".

     OVERVIEW

     We are the largest brewer in Latin America in terms of sales volumes and
the fifth largest beer producer in the world, according to Euromonitor. We
produce, distribute and sell beer, soft drinks and other beverage products
primarily in Brazil, but also in the Dominican Republic, Ecuador, Guatemala,
Peru and Venezuela. In Brazil, we are the leader in the beer market, with a
67.2% volume share in 2003, according to ACNielsen; in the soft drinks segment
we are the second largest competitor, with a 16.6% volume share in 2003, also
according to ACNielsen. Through the acquisition of our stake in Quilmes
Industrial Societe Anonyme (Quinsa) in early 2003, we are also present in the
beverage markets of Argentina, Bolivia, Chile, Paraguay and Uruguay. Quinsa is
the leader in the beer markets of these countries except for Chile. We are
also one of the largest Latin American soft drink producers and sole
distributor of Pepsi beverage products in Brazil. The balance of our business
is comprised primarily of sales of NANC beverage products, including mineral
water, isotonic sport drinks, iced tea, and other products.

     We had consolidated net sales of R$8,683.8 million in 2003 compared to
R$7,325.3 million in 2002. Net sales from our beer operations in Brazil were
R$6,114.6 million, accounting for 70.4% of our consolidated net sales in 2003.
Our sales volumes of beer in Brazil totaled 55.0 million hectoliters in 2003.
In May 2004, our brands accounted for 66.0% of the Brazilian beer market,
according to ACNielsen. AmBev's proprietary beer brands Skol, Brahma Chopp and
Antarctica Pielsen are among the most-consumed brands in the world and occupy
the first, second and the third position, respectively, in the Brazilian beer
market as of May 2004, according to ACNielsen. Our beer production capacity in
Brazil is 84.5 million hectoliters per year as of May 2004.

     Net sales from our CSD & NANC operations were R$1,332.1 million in 2003,
accounting for approximately 15.3% of AmBev's consolidated net sales. CSD &
NANC volumes were approximately 18.8 million hectoliters in 2003. In May 2004,
we had a 16.9% market share of the Brazilian CSD market, according to
ACNielsen. Our CSD production capacity in Brazil is 37.3 million hectoliters
per year as of May 2004. The core brands of our CSD portfolio are Guarana
Antarctica, a proprietary brand, and Pepsi Cola and Pepsi Twist, which we
license from PepsiCo. Our core portfolio accounted for approximately 84.7% of
our CSD sales volumes in 2003. In total, we sold approximately 17.7 million
hectoliters of CSD beverages in 2003 in Brazil. For the year ended December
31, 2003, net sales from CSD operations in Brazil were R$1,205.1 million,
accounting for approximately 13.9% of our consolidated net sales. For the year
ended December 31, 2003, net sales of NANC beverages, including isotonic sport
drinks Gatorade and Marahon, Fratelli Vita mineral water and Lipton Ice Tea
among others, were approximately R$127.1 million, accounting for approximately
1.5% of our consolidated net sales. In total, we sold approximately 1.1
million hectoliters of NANC beverages in Brazil in 2003.

     Net sales from our International Operations in 2003 were R$1,046.1
million, compared to R$396.3 million in 2002, and they represented 12.1% and
5.4%, respectively, of AmBev's consolidated net sales. Our most significant
operations outside Brazil are Cerveceria Rio, our subsidiary in Guatemala, and
Quinsa. Our economic interest in Quinsa was 50.9% at May 31, 2004. The two
operations together represented 76.1% of our international net sales in 2003.


                                      35
<PAGE>


     The remainder of our consolidated net sales is composed of sales of
by-products and malt to third parties in Brazil, which we classify as "Other
Products." Other Products contributed sales of R$190.9 million in 2003,
representing 2.2% of AmBev's consolidated net sales.

     We have an extensive distribution network, for the sale and distribution
of our products, including a network of approximately 332 exclusive third
party distributors and 32 own direct distribution centers. In 2003, third
party distributors accounted for 63.1% of our sales volume in Brazil, while
our own direct distribution system accounted for 36.9% for the same period.

     Operations in Brazil are supported by a production system that includes
29 beverage plants, 11 of which are breweries, four of which are CSD & NANC
bottling plants and 14 of which are mixed plants (both brewing and CSD & NANC
bottling operations are conducted). The aggregate production capacity of our
beverage plants is approximately 88.3 million hectoliters of beer and 45.7
million hectoliters of soft drinks. In addition to the beverage plants, our
Brazilian operations are also supported by six other facilities: four malting
plants (one in Brazil, two in Uruguay and one in Argentina), one concentrate
house and one producer of crown caps (the latter two plants located in
Brazil).

     In 2003, AmBev revised how it reports its operating results to better
reflect the expanding geographical scope of its business. Previously, our
operating results were categorized into three primary business segments: Beer,
Soft Drinks and Other Products (including NANC, by-products and malt sales to
third parties). Both Brazilian and international operations were reflected in
the results for the beer segment. In order to provide a more meaningful
presentation of AmBev's operations outside Brazil, which have become
increasingly relevant following the acquisition of our stake in Quinsa, our
reports now reflect the following four business segments:

               o    Beer Brazil

               o    CSD and NANC

               o    Other Products

               o    International Operations

     The consolidation of the first three business segments provides the
results for AmBev's operations in Brazil ("AmBev Brazil" or "Brazilian
Operations"). Since sales outside Brazil were insignificant until the end of
2002, application of our new reporting methodology to prior periods does not
result in any material changes to the reports previously made available for
those periods.


                                      36
<PAGE>




     COMPETITIVE STRENGTHS

     Our principal goal is to continue expanding our leading position in the
Brazilian beverage market. We believe that we have several competitive
strengths that will enable us to achieve this goal, including:

     Leading position in one of the largest beverage markets in the world: We
are the leading producer in the Brazilian beer market, which was the fourth
largest market in the world in 2003, according to Euromonitor. We are also the
second largest producer in the Brazilian soft drink market, which was the
third largest in the world in 2001, according to PepsiCo. According to the
Brazilian Institute of Geography and Statistics ("IBGE"), the Brazilian market
has a large and youthful consumer base, with 38% of the Brazilian population
under the age of 18. These factors, together with the effects of an unequal
regional income distribution, present significant opportunities for growth in
the Brazilian beverage market. Our leading position in the Brazilian beverage
market has enabled us to generate a substantial and growing revenue base.
Moreover, it provides an excellent platform for further growth.

     Extensive and efficient distribution system: Using our extensive
distribution network, which combines direct and third-party distribution
systems, we serve over one million points of sale throughout Brazil with our
beer, soft drinks and NANC beverage products. This network allows us to deepen
our market penetration and further enhances our favorable competitive position
in terms of both cost and service. The integration of our three distribution
networks (Antarctica, Brahma and Skol), and the expansion of direct
distribution in large cities will allow us to realize significant cost savings
and higher margins through economies of scale and delivery of multiple brands
with the same fixed-cost structure. We believe this integration will also
result in an alignment of interests and improve brand management.



                                      37
<PAGE>


Finally, we use proprietary technology to capture data on sales trends,
consumption patterns and the sensitivity of demand of each point of sale.

     Broad portfolio of leading brand name products: We offer a complete
portfolio of beer, soft drink and NANC beverage products, including some of
the most consumed beer brands in the world. The Skol, Brahma Chopp and
Antarctica Pilsen brands are the top three beer brands in Brazil, according to
ACNielsen. Moreover, our beer portfolio had approximately 77% brand preference
in June 2003, according to our estimates. In addition, we own the second most
consumed soft drink brand in Brazil, Guarana Antarctica, according to
ACNielsen. We believe that our extensive beverage portfolios enable us to
address a wide variety of consumer preferences across consumption occasions,
demographic profiles and regions.

     Low cost producer: We believe that we are one of the lowest cost
producers in the beer industry. We have increased operating efficiency and
production capacity through significant investments in plant modernization,
plant construction and technological advancement. We regularly set benchmarks
for ourselves against other participants in the beverage industry and
implement new projects and measures to further improve our productivity. In
addition, we expect to continue to: (i) achieve further reductions on prices
of raw material, packaging and utilities through negotiation, development of
new national and international suppliers and tolling operations; (ii) reduce
costs and increase yields through the launch of several multifunctional
initiatives and projects, and new developments in Packaging Engineering; (iii)
increase process and packaging efficiencies by improving plant floor execution
to reduce labor costs; and (iv) reduce fixed costs through supplier
centralization and development.

     Management expertise: The Brazilian beverage market, one of the largest
beverage markets in the world, presents significant opportunities for growth.
We believe our management expertise, coupled with our leading brands and our
extensive network, will allow us to capitalize on such opportunities.
Moreover, our management possesses over a decade-long track record of
successfully operating AmBev's business through political instability and
economic downturns, such as through periods of high inflation and currency
devaluation. Our management team has proven over time its ability to continue
creating value even in the most difficult circumstances.

     BUSINESS STRATEGY

     Our growth strategy is driven by the following objectives: managing
revenue and creating per capita consumption opportunities; capturing market
opportunities; improving distribution efficiency; improving point of sale
execution; leveraging existing profitable opportunities in soft drinks;
maintaining low costs; and recruiting, training and maintaining the best
employees.

     To grow the top line through revenue management and the creation of per
capita consumption opportunities: We will continue to invest in our brands to
strengthen consumer preference and are progressively increasing sales volumes
from our higher margin brands. With consumer preference for our brands already
at approximately 77% in June 2003, according to our estimates, we have a
strong base from which to expand consumption by introducing new drinking
occasions. We have launched new products, such as Skol Beats, re-energized
heritage brands like Bohemia and Original to meet the preferences identified
at premium prices, and we also launched Brahma Light. Based on market and
consumer consumption data, we have targeted a range of opportunities for
increasing per capita consumption by region, neighborhood, income class and
consumption pattern. We also believe that we can still identify more
opportunities to better manage the industry margin pool and to retain more of
the value of our brands without increasing prices to the consumer above
inflation.

     To capture market opportunities in Brazil: In addition to our strategy to
increase sales of higher margin products and develop new consumption
opportunities, our knowledge, brands, distribution network and sales
technology also allow us to capitalize on the significant opportunities for
growth



                                      38
<PAGE>



offered in our primary mainstream market. The size of Brazil's beverage
market, its low per capita beverage consumption, and its young and growing
population combine to create a favorable backdrop for increased domestic
beverage consumption. Moreover, we believe that improvements in the Brazilian
economy could result in a growing demand for our products as consumers both
increase the volume of their consumption and as they shift toward our
premium-priced beverages instead of lower-priced beverage products made by
other producers.

     To improve the efficiency of our distribution network: Delivering three
national beer brands (Antarctica, Brahma and Skol) to one million points of
sale is the most complex feature of our business. In recent years we have been
gradually, but steadily, moving towards using direct distribution in major
cities where economies of scale makes this a logical strategy. At the same
time, we have been strengthening our system of third-party distribution.
Instead of operating three inherited, parallel, single-brand systems, we are
shifting towards a multi-brand network of distributors committed to handling
all of our brands. Though far from completion, we have already begun to
realize the revenue benefits of having three brands managed under the same
sales and distribution process.

     To improve our point of sale execution through new and creative measures:
We are constantly seeking to improve our point of sales execution through new
and creative measures. A key marketing initiative has been the introduction
into the Brazilian market of our custom-made beer refrigerators for use at our
points of sale. Our beer refrigerators focus on on-premise consumption, and
are specially designed and built to chill beer at the optimal temperature for
consumption in Brazil. Before these refrigerators were introduced, most beer
in Brazil was served to consumers from refrigerators designed to chill soft
drinks, which traditionally is preferred at warmer temperatures than beer. Our
special refrigerators, decorated to maximize the visual impact of our Brahma,
Skol, Antarctica and Bohemia brands, chill our beer products to sub-zero
(centigrade) temperatures, which market research has shown to be the
consumers' preferred temperature for beer.

     To leverage the profitability of the soft drink business by taking full
advantage of the current infrastructure and sales technology of our beer
business: We have a strong product portfolio that includes the three leading
beer brands in Brazil (Antarctica Pilsen, Brahma Chopp and Skol). Also, our
portfolio includes two of the top three soft drink brands in Brazil (Guarana
Antarctica and Pepsi Cola), according to ACNielsen, and brand leaders in
several niche segments. The stronger our soft drink brands, the better
supplier we are to the point of sale and the greater the distribution cost
synergies available to the business as a whole. We have also added more
high-margin products to our portfolio, such as Gatorade and Pepsi Twist, to
further enhance our profitability. The development of the soft drink segment
has been and will continue to be of great strategic importance for us.

     To maintain our commitment to reduce costs: One of our key strengths is
our ability to maintain and reduce costs. We are already one of the lowest
cost beer producers in the world, but we still see opportunities to improve
our productivity. For example, we created a Shared Services Center ("SSC") to
centralize activities such as logistics, human resources and finance, which
has allowed the sales and production units to sharpen their focus by
eliminating these functions. The SSC leverages technology to achieve
excellence in our processes, and can quickly incorporate new areas of
operation.

     To recruit, train and maintain the best employees: The essence of AmBev
has been, and will continue to be our culture, management strength and depth,
and the unparalleled productivity of our employees. Our employees are
carefully recruited and highly trained, as well as confident and demanding. We
are exceptionally motivated by an aggressive variable pay system that rewards
performance, ownership and entrepreneurship, while consistently adding
sustainable shareholder value. AmBev, as a whole, is focused on achieving
long-term, sustainable results - resilience and financial discipline are
integral parts of our culture.

         OUR PRODUCTS AND BRANDS


                                      39
<PAGE>


     We produce beer, soft drinks and non-alcoholic non-carbonated beverages,
including isotonic sport drinks, iced tea and water. Our operations in Brazil
accounted for approximately 88.0% of our net sales in 2003.

     The following table presents a breakdown of AmBev's sales volumes by
business segments:

                                                 YEAR ENDED DECEMBER 31,
                                      ------------------------------------------
                                       2003              2002             2001
                                      ------            ------           -------
                                              (millions of hectoliters)
Beer Brazil..........................  55.3              58.0             59.0
CSD & NANC...........................  18.8              19.6             19.2
International Operations.............  10.3(1)            3.9              3.3

-----------------------------
Source: Company Information
(1) Includes Quinsa's volumes in proportion to AmBev's economic stake in Quinsa.

     The following table sets forth, as a percentage of total sales, our
revenue breakdown per business segment during the periods indicated:

                                                 YEAR ENDED DECEMBER 31,
                                      ------------------------------------------
                                      2003               2002             2001
                                     ------             ------           ------
                                                  (% of revenues)
Beer Brazil..........................  70.4              75.7             73.9
CSD & NANC...........................  15.3              16.8             15.8
International Operations.............  12.0               5.4              6.4
Other Products.......................   2.2               2.1              3.9

------------------------------
Source: Company Information


     Beer Brazil

     Beer Brazil is our core business and the largest contributor to our net
sales. For the year ended December 31, 2003, Beer Brazil sales accounted for
70.4% of our net sales, totaling R$6,114.6 million and with sales volumes of
55.3 million hectoliters.

     Core brands

     Our beer brands are divided into three main beer brand portfolios: Skol,
Brahma and Antarctica. Each of these portfolios offers a variety of beers,
including pilsen, pilsner, lager, dark and non-alcoholic beers. Skol Pilsen,
Brahma Chopp and Antarctica Pilsen, which are all standard pilsen beers, are
our core products and the flagships of their respective brand portfolios.

     Premium brands

     The remainder of our beer sales in Brazil relates to premium brands, all
of which are also proprietary brands, with the exception of licensed brands
Miller and Carlsberg. Bohemia is the leading premium brand in Brazil, growing
from 0.6% of volume market share in 2001, before its re-launch, to 1.8% in
December 2003, according to ACNielsen. The development of this brand
constitutes a significant step towards growing the super premium segment in
Brazil which represented only 6.4% of industry volumes in 2003, according to
ACNielsen.

     In October 2002, we launched Skol Beats, another brand introduced to
develop the super-premium segment. This pilsen beer portfolio extension has a
higher alcoholic content and is sweeter than its mother-



                                      40
<PAGE>


brand Skol. The initial launch was concentrated in Sao Paulo, Rio de Janeiro
and Minas Gerais, and the roll-out for the whole country was performed in
March 2003.

     In August 2003, we re-launched Brahma Light. The initial re-launch was
concentrated in metropolitan area of Sso Paulo, in cans and long-necks
presentations. The national roll-out of Brahma Light is expected to take place
during 2004.

     The following table sets forth the market shares of our principal beer
brand portfolios by volume in Brazil:

PORTFOLIO                                          YEAR ENDED DECEMBER 31,
-------------                                 ----------------------------------
                                                  2003                  2002
                                              ---------------   ----------------
                                                      (Market Share - %)
Skol.........................................     32.8                  32.7
Brahma.......................................     20.9                  21.0
Antarctica...................................     13.5                  13.4

-------------------
Source: ACNielsen


     Our Skol portfolio includes Skol Pilsen, Skol Beats and Carlsberg, which
are pilsen beers, and Caracu, which is a dark beer.

     Our Brahma portfolio includes Brahma Chopp and Miller Genuine Draft,
which are pilsen beers and Malzbier, which is a dark beer, Brahma Extra, a
strong-flavored pilsen beer, Chopp da Brahma, which is a draft beer, and
Brahma Light, a light beer.

     Our Antarctica portfolio includes Antarctica Pilsen, Bohemia, Polar
Pilsen, Serramalte, Antarctica Original and Antarctica Pilsener Chopp, which
are pilsen beers, Antarctica Malzbier and Antarctica Pilsener Chopp Escuro,
which are dark beers, Polar Export, which is a lager beer, Antarctica Pilsen
Extra and Antarctica Pilsen Extra Cristal, strong-flavored pilsen beers, and
Kronenbier, which is an alcohol free beer.

     Sales of beer in Brazil are conducted through an extensive distribution
network, which includes approximately 332 exclusive third party distributors
and 32 direct distribution centers. Through this network AmBev is able to
serve approximately one million points of sale every week throughout Brazil.

     The majority of our beer is sold in 600 ml returnable glass bottles. In
order to maximize sales and per capita consumption of our products, we analyze
sales data on a regular basis in an effort to develop a mix of product
presentations that best satisfies our consumers. The following table sets
forth the historical presentations for our beer products by volume in Brazil:



                                      41
<PAGE>



PRESENTATION                                        YEAR ENDED DECEMBER 31,
------------------                            ----------------------------------
                                                2003         2002          2001
                                              -------       ------        ------
                                                          (% volume)
Returnable glass bottles.....................   69%          68%           67%
Cans.........................................    25           26            27
Non-returnable glass bottles.................    3            3             3
Barrels (draft beer).........................    2            2             2
Others.......................................    1            1             1

---------------
Source: AmBev


     Beverage sales in non-returnable packages are less profitable. Cans are
particularly popular with supermarket vendors, primarily because of the need
to allocate additional space to store returnable bottles.

     We also export beer from Brazil to countries where we currently do not
have local operations. Total beer exports, however, represented less than 1%
of Beer Brazil net sales in 2003.

     CSD & NANC

     Sales of CSD & NANC represented approximately 15.3% of our consolidated
net sales in 2003, totaling R$1,332.1 million and with sales volumes of 18.8
million hectoliters.

     Carbonated Soft Drinks (CSD)

     Sales of CSD represented approximately 13.9% of our consolidated net
sales in 2003, totaling R$1,205.1 million and with sales volumes of 17.7
million hectoliters. Our strategy with respect to CSD has been to focus our
efforts on a handful of profitable products which we treat as our core CSD
portfolio. This portfolio includes the brands Guarana Antarctica, our
proprietary brand, and Pepsi Cola and Pepsi Twist, which we sell under license
from PepsiCo.

     The following table sets forth market share information for our core soft
drink brands (regular and diet) in Brazil and our other CSD brands:

                                                    YEAR ENDED DECEMBER 31,
                                             -----------------------------------
                                              2003        2002       2001
                                             ------      ------     ------
                                                  (% of market share)

Guarana Antarctica...........................  8.2         7.9       8.0
Pepsi-Cola...................................  4.1         3.9       4.3
Pepsi Twist..................................  1.6         1.2       0.0
Others.......................................  2.7         3.0       4.6

----------------
Source: AmBev


          In addition to our core CSD portfolio, we also sell the following
brands:

     o    Proprietary brands: Soda Limonada Antarctica (regular and diet),
          Tonica Antarctica (regular and diet), Club Soda Antarctica, Sukita,
          Guarana Brahma (regular and diet), Limao Brahma, Tonica Brahma.

     o    PepsiCo Franchises: Pepsi X, Teem (regular and diet), Seven UP
          (regular and diet).



                                      42
<PAGE>


     Our soft drinks are sold and distributed through our beer distribution
network, which serves on-premise points of sale, as well as supermarkets.
Guarana Antarctica is also sold in major fast food outlets such as McDonald's
and Pizza Hut. In 2002 we expanded the Pepsi brand portfolio to include Pepsi
Twist, which has been well received by consumers.

     During the early 1990's, when non-returnable PET packaging was introduced
in the Brazilian CSD market, the industry moved rapidly to one-way
(non-returnable) presentations, both plastic bottles and cans, as opposed to
returnable glass bottles. The following table sets forth the historical volume
breakdown per packaging presentation of our CSD sales:

PRESENTATION                                        YEAR ENDED DECEMBER 31
-------------                                    ------------------------------
                                                   2003        2002       2001
                                                 -------      ------     ------
                                                        (% of volume)
One-way plastic bottles.......................... 70%         66%        65%
Cans............................................. 23          25         24
Returnable glass bottles......................... 6           7          9
Post Mix......................................... 1           2          2

-------------------------
Source: Company Information


     We also export CSD from Brazil to other countries. Total CSD exports,
however, represented less than 1% of CSD & NANC net sales in 2003.

     Non Alcoholic and Non Carbonated Beverages (NANC)

     The NANC segment includes sales of mineral water, isotonic sport drinks
and iced tea, which we sell and distribute through our beer distribution
network. NANC products represented 1.5% of our consolidated net sales in 2003,
totaling R$127.1 million and posting sales volumes of 1.1 million hectoliters.

     We own 100% of the share capital of Fratelli Vita Bebidas Ltda which
produces and markets the Fratelli Vita brand of mineral water and the Marahon
brand of isotonic sport drinks. According to ACNielsen, the Brazilian water
market was 15.5 million hectoliters in 2003.

     The isotonic sports drinks are relatively new to Brazil, and total
consumption in 2003 was approximately 0.3 million hectoliters, according to
ACNielsen. Our proprietary brand Marahon is the second most popular brand in
this market, with a 4.5% average market share by volume in 2003, according to
ACNielsen. In December 2001, we extended our franchise agreement with PepsiCo
and incorporated the Gatorade brand into our portfolio. This agreement, which
expires in 2017, is an extension of AmBev's current agreement with PepsiCo,
signed in 1997, to produce and distribute Pepsi products in Brazil. This
partnership reinforces AmBev's strategic target to grow its non-alcoholic
beverages business. As of January 2002, we began producing and distributing
Gatorade, the leading brand in this segment, with an average market share in
2003 of 92.2% according to ACNielsen. In November 2002, we introduced a line
extension, Gatorade Fierce, a colored isotonic drink, targeting the teenager
market. For information on the investigation by CADE, the Brazilian Antitrust
authority, into our Gatorade agreement, see "Consolidated Financial Statements
and Other Financial Information - Legal Proceedings - Joint Ventures and
Alliances".

          Brazilian iced tea consumption was approximately 0.5 million
hectoliters in 2003, according to ACNielsen. Lipton Ice Tea, the other major
product in our NANC portfolio, is the market leader in the iced tea segment,
with an estimated market share of 38.5% in 2003, according to ACNielsen. Our
main competitor in this market is Mate Leao, with a market share of 37.2% in
2003, also according to



                                      43

<PAGE>



ACNielsen. In 2002, the Coca-Cola Company, through an agreement with Nestle,
introduced the Nestea iced tea, which had a 17.0% of market share in 2003.

          We previously sold Lipton Ice Tea through a joint venture with
Unilever Brasil Ltda. ("Unilever Brasil"). However, PepsiCo and Unilever
entered into their own joint venture as of January 2004; as a result, AmBev
has begun to produce and distribute Lipton Ice Tea as an extension of our
agreement with PepsiCo.

          Other Products

          The Other Products segment is comprised of sales of by-products from
beverage production and malt. Other Products net sales in 2003 were R$ 191.0
million, representing 2.2% of AmBev's consolidated net sales.

          International Operations

          The relevance of International Operations to AmBev's business
increased significantly in 2003. Net sales from International Operations in
2003 were R$1,046.1 million, representing 12.0% of the company's consolidated
net sales, compared to 5.4% in 2002.

          AmBev's International Operations are comprised of:

     o    AmBev Peru, our Peruvian subsidiary which owns the Pepsi franchise
          for the metropolitan region of Lima and the north of Peru. The
          franchise was obtained in October 2003 in connection with our
          acquisition of production and distribution assets from Embotelladora
          Rivera. AmBev plans to leverage Pepsi's distribution system to
          launch a beer brand in Peru in the near future. Currently, we are
          building beer production facilities in Lima's metropolitan area. Our
          decision to pursue a beer greenfield project in Peru is based on the
          growth potential of that market, our expansion strategy in Latin
          America, our developed know-how in the launching of greenfield
          projects, and the relatively low entry cost. We expect to start our
          operations at the beginning of 2005.

     o    CA Cerveceria Nacional, our Venezuelan subsidiary, which was
          acquired in 1994. We sell the Brahma brand in Venezuela, and in
          2003, Brahma had a market share of approximately 7.0%, according to
          Caveface. We have a strong presence in Caracas, the country's
          principal market, holding a market share in the Caracas region of
          approximately 23.9%, according to Promoting.

     o    Cerveceria Rio, AmBev's subsidiary in Guatemala, which was created
          through a joint venture with the Central America Bottling
          Corporation ("CabCorp"), the main Pepsi bottler in Central America
          and the sole Pepsi bottler in Guatemala. Cerveceria Rio launched its
          operations in September 2003 with the introduction of the Brahva
          brand, an adaptation of our Brahma brand. Benefiting from CabCorp's
          efficient and extensive distribution system, we have been able to
          capture approximately 30% of the market according to our
          estimates. Furthermore, in May 2004, we began exports from Guatemala
          to Nicaragua where CabCorp also has the Pepsi franchise.

     o    Cerveceria Suramericana ("Cervesur"), our Ecuadorian subsidiary,
          which was acquired in November 2003. Cervesur sells the Biela brand
          and occupies the second leading position in Ecuador, with a market
          share of approximately 6% according to our estimates.

     o    Embotelladora Dominicana CXA ("Embodom"), our subsidiary in the
          Dominican Republic, which has the Pepsi franchise for the Dominican
          Republic. In February 2004, AmBev reached an agreement with
          Embodom's controlling shareholders to acquire a 51% stake in Embodom
          and


                                      44
<PAGE>




          jointly explore both the Dominican soft drinks and beer markets.
          AmBev is currently building a beer plant in the region of Santo
          Domingo, which will be contributed to Embodom in exchange for
          additional shares that will increase AmBev's ownership interest in
          Embodom to 66%.

     o    Our economic stake in Quinsa, which was 49.66% as of December 31,
          2003. Through a shareholders agreement we jointly control Quinsa
          together with Beverage Associates Corporation ("BAC"), a holding
          company representing Quinsa's other controlling shareholders. Quinsa
          is the leader in the beer markets of Argentina, Bolivia, Paraguay
          and Uruguay, and occupies the second leading position in Chile.

          Quinsa is a Luxemboug-based holding company which controls 87.63% of
the outstanding shares of QIB. Th remaining 12.37% interest in Quinsa is held
by BAC and AmBev, which hold 5.32% and 7.05%, respectively.

          Quinsa, through QIB, controls beverage and malting businesses in
five Latin American countries. Its beer brands are strong market leaders in
Argentina, Bolivia, Paraguay and Uruguay and have a presence in Chile.
Further, pursuant to a license agreement entered into with AmBev on January
31, 2003, Quinsa received the exclusive rights to produce and sell AmBev
brands in Argentina, Bolivia, Chile, Paraguay and Uruguay. Similarly, under a
distribution agreement entered into between Quinsa and AmBev also on January
31, 2003, AmBev has the exclusive right to distribute Quinsa's brands in
Brazil.

          In the soft drinks market, Quinsa has bottling and franchise
agreements with PepsiCo, which account for 100% of PepsiCo beverage sales in
Uruguay and more than 80% of PepsiCo beverage sales in Argentina. Soft drink
sales in Argentina were nearly 5.9 million hectoliters in 2003.

          After Heineken terminated its relationship with Quinsa in January
2003, Heineken announced in April 2003 an agreement with the Schorghuber Group
to acquire a 50% interest in Inversiones y Rentas S.A., the holding company
that holds a majority of the voting rights of Companias Cervecerias Unidas
S.A., Quinsa's principal competitor in the Argentine and Chilean beer markets.
As a consequence of that transaction, Quinsa and Heineken terminated their
agreement which gave Quinsa the right to produce and sell the Heineken brand in
Argentina, Bolivia, Chile, Paraguay and Uruguay.

          For the year ended December 31, 2003, approximately 76.6% of
Quinsa's sales was attributable to sales of beer. The beer business in each of
Quinsa's countries of operation was characterized by strong competition among
the major brewers. In recent years these major competitors had expanded into
new markets, engaged in intensive advertising and promotional campaigns and
introduced new brands. The acquisition of our interest in Quinsa in January
2003, however, has impacted the competitive environment in the markets in
which Quinsa operates as this alliance combines the two largest beer companies
in Argentina, Paraguay and Uruguay. As of December 2003, Quinsa's breweries
enjoyed leading market shares of 80.0% in Argentina, 94.3% in Paraguay, 98.5%
in Uruguay and approximately 97.3% in Bolivia. In Chile, Quinsa's market share
was 10.0%.



                                      45
<PAGE>


          DISTRIBUTION AND SALES

          Distribution.

          We maintain an extensive third party and direct distribution system
which has enhanced the penetration of our brands throughout Brazil. Control of
a strong distribution network is a competitive advantage in the Brazilian
marketplace due to the large number of small points of sale as well as the
prevalence of returnable packaging, especially in beer, which must be
transported both to and from the points of sale. The Brazilian beer market is
characterized by a high proportion of on-premise consumption. According to
ACNielsen, approximately 70% of the beer sold in 2003 was consumed on-premise
in bars, restaurants and small retail establishments, with the remaining 30%
of sales from supermarkets. Because on-premise beer sales are typically
delivered in returnable bottles, the capital expenditures and the commitments
necessary to develop an efficient bottling operation constitute a significant
barrier to entry in the Brazilian beverage industry. However, as is the case
in more developed beverage markets, non-returnable packaging in the Brazilian
market has been growing over the past years and may continue to grow.

          We currently maintain three separate distribution networks, composed
of exclusive third party distributors and direct distribution. Combined, these
distribution networks reach over one million individual points of sale in
Brazil. We are continuously improving the process of multiple-brand
distribution (in which one distributor distributes two or more of our beer
portfolios). The consolidation of the three networks into a multi-brand
system, both in direct and third-party sales, is expected to result not only
in cost savings, but significantly improved distribution and execution at the
point of sale.

          We utilize the "pre-sell" system as our principal method of sales in
Brazil. Under the pre-sell system, a separate sales representative obtains
orders from customers prior to the time of delivery by trucks. The pre-sell
system enables us to utilize our trucks more efficiently, since our route
trucks can be loaded with precisely the amount needed to meet our customers'
orders, and it can also provide us real-time information about the product and
presentation needs of our customers, as the majority of our sales staff relays
order information to our distribution centers using hand-held computers.

          One of our major initiatives has been to continuously improve our
distribution network in order to increase the volume of sales and deliveries
per distributor, thus achieving economies of scale. In connection with our
on-going goal of increasing the efficiency of our distribution networks, we
developed an "Excellence Program" to evaluate, train and motivate our
distributor partners. The Excellence Program allows us to benchmark all
third-party and direct distribution operations, and is a tool for
standardizing the specific operating procedures needed to run an efficient
distribution operation and to maintain brand integrity. This program was
implemented in 1992 in the Brahma and Skol distribution network and later in
the Antarctica distribution network. As part of our Excellence Program, we
have significantly reduced the number of distributors since 1994 and focused
on increasing the volume and the quality of service provided by these
distributors. We also intend to expand our direct distribution system in large
urban areas, thereby incurring additional selling expenses as a result of,
among other things, expansion of our sales force and increased transportation
costs. However, we expect that this investment will be more than off-set by
additional revenues.



                                      46
<PAGE>


          Despite the growth of direct distribution, we believe that the
continued development of both our exclusive third-party and direct
distribution networks are fundamental to our success. We will continue to
invest in both the third-party and direct systems, including the exchange of
best practices, to improve overall point-of-sale execution.

          Third-Party Distribution Network.

          Our third-party distribution network, currently the primary means of
distribution for our products in Brazil, distributed approximately 63.1% of
our volume for the year ended December 31, 2003. Approximately 47.7% of such
volume was sold by distributors of our three main brands. We have exclusive
agreements with nearly 332 independent distributors who collectively cover all
26 states in Brazil and the Federal District. As we seek to improve
efficiencies in our distribution network, including economies of scale, we
will seek to continue to optimize the consolidation of our three distribution
networks.

          Our distribution agreements require the distributor to carry
exclusively our Brahma, Skol and/or Antarctica beer portfolios, as well as our
core soft drink portfolio, and grant the distributor exclusive rights to sell
such products within specific channels in a defined territory. In the case of
soft drinks, where we have a core portfolio sold through all three
distribution networks, the distributors serving the same territory compete
with one another; nevertheless, only those designated distributors are
entitled to sell our soft drinks in that specific territory. Generally, these
agreements have an initial term of between one and five years, and are
renewable for an additional term after which the contract will not have a
pre-determined termination date. In addition, pursuant to our agreement with
CADE, we are required to share our distribution network with the Dado Bier
brand, which belongs to a regional producer in the South of Brazil (for
further information on this matter see "Background on the Company - Brazilian
Antitrust Approval").

          The optimal number of distributors within an area is determined by
considering, among other things, market needs, number of points of sale, and
geographic features. Our sales volume is not concentrated in any one
distributor within any particular region.

          Our third-party distributors pay for our products either in cash at
time of delivery or through a credit arrangement. Credit terms are typically
based on the distance between the distributor and the plant, with one extra
credit day for each 300 kilometers between the plant and the geographical
region covered by the distributor. Our current average credit term with our
distributors is approximately two days. We have an administrative team
dedicated to providing support to our third-party distributors, analyzing ways
to improve efficiency and reduce costs. Under our Excellence Program we
continually seek to optimize practices for cost reduction, sales effectiveness
and customer service. We have also developed several other innovative programs
aimed at improving our distribution network, such as educational programs at
our in-house training academy for our in-house and third-party personnel and
weekly sales force training through satellite broadcasts containing market
updates and information on our current strategic initiatives.



                                      47
<PAGE>


          Direct Distribution System

In addition to our third-party distribution networks, we operate a direct
distribution system that distributes our products directly to points of sale,
including both on-premise and off-premise consumption. Our direct distribution
system includes 32 direct distribution centers that together delivered
approximately 36.9% of our beverage products by volume for the year ended
December 31, 2003. We intend to continue expanding the number of brands
handled by our direct distribution system in larger urban areas and expect
direct sales to account for up to 50% of our sales by volume in the next
years.

          Sales

          Points of Sale

          We restructured our Brazilian sales operations, and as of April 1,
2003, our operations in Brazil are divided into nine geographic regions. Until
April 1, 2003 we divided our operations into five regions. We expect this
change to further improve execution as we intend to become closer to the
market. During 2003, our products were sold in approximately one million
points of sale throughout Brazil. We sell our beverage products throughout
Brazil to:

     o    retail establishments such as restaurants, bars and small- and
          medium-sized retail outlets, primarily for on-premise consumption;

     o    small self-service stores for both on and off premise consumption;
          and

     o    supermarket chains for off-premise consumption.

          Terms of Sale

          For direct distribution, the terms and other credit conditions are
defined for each point of sale based on a credit score model, with average
terms of approximately five days. Some specific clients, such as major
supermarkets and clients with national presence, enjoy longer credit terms
(average of 20 days).

          Sales Force

          We maintain separate sales forces for specific groups of products,
organized by geographic region. Each sales force is engaged not only in
selling our products, but also in monitoring the performance of our products
in several different ways, including evaluation of sales by brand,
presentation (packaging) and distribution channel. When a given territory is
serviced by an exclusive, third-party distributor, the salesperson is an
employee of the distributor. If the area is serviced by our direct
distribution system, the salesperson is our employee. Sales personnel are
offered various incentive packages designed to maximize margins and revenue at
given price levels and to prevent cannibalizing sales from our other brands.

          Pricing

          Since the Brazilian government deregulated beer prices in 1990, our
pricing has generally been based upon a suggested retail price issued
periodically by our headquarters. The final selling price in each of our nine
market regions is based on the suggested price, and takes into account local
taxes and competitive pressures. See "- Brazilian Beverage Industry Overview -
The Brazilian Beer Market - Pricing". Actual prices are reported daily through
our information network, so that the corporate staff is able to monitor
discount levels and detect market trends. When determining the suggested
price, we consider many factors, each of which varies importance from time to
time. These factors include general economic conditions, regional taxes, the
success and profitability of our various product presentations, the



                                      48
<PAGE>


prices of its competitors, the effects of inflation and the level of its
costs. We work continuously with the owners of our points of sale to achieve
competitive consumer prices. Most of our sales force work with handheld
computers, equipped with a sales algorithm, which enables them to set optimal
retail prices. There is currently no regulation of wholesale or retail beer or
soft drink prices in Brazil.

          SALES OF OUR PRODUCTS ARE NOT DEPENDENT UPON ANY SINGLE CUSTOMER.
OUR LARGEST CUSTOMER ACCOUNTED FOR LESS THAN 3% OF OUR TOTAL NET SALES IN
2003.

          Advertising and Promotional Activity.

          We advertise and promote our products through television and other
media advertising campaigns, including billboards, and through the sponsorship
of recreational events. In addition, we engage in various point of sale
promotions, such as end-aisle displays and special contests, aimed at
enhancing consumer preference for our brands. In certain competitively key
outlets, we provide our point of sales establishments with branded furniture
featuring our products' logos and distinctive color schemes, and, where
competitively appropriate, promotional banners and posters advertising the
pricing of our products at that establishment. These programs allow us to gain
visual dominance of particular points of sale, strengthening our brand and
encouraging customers to purchase our products.

          On May 24, 2001, we signed an agreement with the Brazilian Soccer
Federation, or the CBF, for sponsorship of the Brazilian national soccer team.
We have chosen Guarana Antarctica as the soft drink brand to initiate our
sponsorship campaign. The Guarana Antarctica brand logo is displayed on the
Brazilian national soccer team training shirt. According to the sponsorship
agreement, we may also run other promotions, use illustrated cans, distribute
points of sale merchandising materials and implement advertising campaigns,
which may be extended to our entire beverage portfolio. We will pay the CBF a
minimum of U.S.$10 million annually for 18 years. The amount payable by us may
increase by up to double the minimum amount based on bonus format on the
performance of our proprietary soft drink market share.

          A key marketing initiative has been the introduction into the
Brazilian market of our custom-made beer refrigerators for use in points of
sale focusing on on-premise consumption, especially designed and built to
chill beer at the optimal temperature for consumption in Brazil. Before these
refrigerators were introduced to the points of sale, most beer in Brazil was
presented to consumers in refrigerators designed to chill soft drinks. Our
special refrigerators, decorated to maximize the visual impact of our Brahma,
Skol, Antarctica and Bohemia brands, chill our beer products to sub-zero
(centigrade) temperatures, which market research has shown to be consumers
preferred temperature, and have shown a positive impact on sales volumes at
their locations. As of December 31, 2003, we had installed 186,500
refrigerators in key locations throughout the country. We plan to install
significantly more sub-zero coolers at our point of sales.

          We regularly conduct market surveys to monitor the image of our
products and the effectiveness of our marketing activities. Within the last
few years we initiated several marketing plans, which were designed to assist
in making commercial strategy decisions for each environment in which we
compete. We also use a telephone service, the "Consumer Service Center," which
enables us to receive consumers' comments about our products. We received
approximately 24,000 calls per month from consumers in 2003. Communication
with consumers is a major priority for us and has been improved by the
creation of websites for each of our principal beverage brands.

          Packaging

          The substantial majority of our beer sales are made in 600 ml
returnable glass bottles. In order to maximize sales and per capita
consumption of our products, we examine sales data on a regular basis in an
effort to develop a mix of product presentations to best satisfy our
customers. The following table sets forth the historical presentations for our
beer products by volume in Brazil:



                                      49
<PAGE>


PRESENTATION                                     YEAR ENDED DECEMBER 31,
--------------                           ---------------------------------------
                                           2003            2002            2001
                                         -------          ------          ------
                                                        (% volume)

Returnable glass bottles...............    69%             68%             67%
Cans...................................    25              26              27
Non-returnable glass bottles...........     3               3               3
Barrels (draft beer)...................     2               2               2
Others.................................     1               1               1

----------------
Source: AmBev


          Packaging in the Brazilian beer market has been characterized by the
predominance of returnable glass bottles. However, the cans segment grew after
1994 due to favorable foreign exchange rates, which made it cheaper to import
aluminum used for can production, as well as the decision by some supermarkets
to discontinue the sale of beer in returnable bottles. Aluminum can prices
increased in local currency as a result of the devaluations of the real in
1999 and 2002. Beverage sales in cans are generally less profitable for us
because of the lower margins attributable to non-returnable packages. Cans are
particularly popular with supermarket vendors, primarily because they prefer
not to allocate the additional space necessary to store returnable bottles.

          The soft drink industry in Brazil moved rapidly to one-way plastic
bottles and cans as opposed to returnable glass bottles during the early
1990's. The following table sets forth the packaging presentation of our soft
drink products by volume in Brazil:

PRESENTATION                                        YEAR ENDED DECEMBER 31,
------------------                          ------------------------------------
                                             2003           2002           2001
                                             -----         ------         ------
                                                       (% of volume)
One-way plastic bottles.................      70%            66%            65%
Cans....................................      23             25             24
Returnable glass bottles................      6              7              9
Post Mix................................      1              2              2


----------------
Source: AmBev



         COMPETITION - BEER

          Beer producers compete for market share through brand preference,
distribution, product availability, pricing, product packaging, consumer
promotions and service provided to retail outlets, including merchandising
equipment, maintenance of bottle inventories and frequency of visits.

          Until July 1999, when Brahma and Antarctica came under our common
control, the Brazilian beer market had three major producers: Brahma, which
was the market leader through its Brahma and Skol brands, followed by
Antarctica, owner of the Antarctica Pilsen and Bavaria Pilsen brands (the
latter of which we sold to Molson Inc. ("Molson") in December 2000 pursuant to
our performance agreement with CADE; for further information on this matter
see "Background on the Company - Brazilian Antitrust Approval"), and
Cervejarias Kaiser Brasil Ltda. ("Kaiser"), owner of the Kaiser Pilsen brand
(which was sold to Molson in March 2002).

          In December 2002, the three largest beer producers in Brazil were,
respectively, AmBev, Molson (which owns Kaiser and Bavaria) and Grupo
Schincariol ("Schincariol"). However, during the second half of 2003,
Schincariol relaunched its core brand, under the name of "Nova Schin" through
a promotional campaign that significantly increased its market share. As a
result, Schincariol is now the second largest



                                      50
<PAGE>


brewer in Brazil, ahead of Molson.

          In December 2003, AmBev, Schincariol and Molson accounted for
approximately 90.4% of beer sales volumes in Brazil, according to ACNielsen.
The beer business in Brazil is characterized by strong competition among these
major producers, with each engaging in intensive advertising and promotional
campaigns, the introduction of new brands and the development of more
convenient forms of packaging.

          Molson entered the Brazilian beer market in 2000 through the
purchase of the Bavaria brand and related assets from us. See "Background on
the Company - Brazilian Anti-trust Approval". The Bavaria brand held
approximately 2.6% of the Brazilian beer market by volume as of December 31,
2003, according to ACNielsen. Molson's purchase of Kaiser has made it one of
our largest competitors. Kaiser was a joint venture created in 1982 by
Heineken N.V. ("Heineken"), the Coca-Cola Company and 18 Brazilian Coca-Cola
bottlers. Molson's current beer portfolio includes Bavaria Pilsen, Bavaria
Premium, Bavaria Sem Alcool, Kaiser Pilsen, Kaiser Bock, Kaiser Gold, Kaiser
Summer Draft, Heineken and Xingu. Generally, Molson's beer prices are lower
than ours in comparable market segments. Given Molson's financial soundness,
plus the support of both Heineken and Coca-Cola bottlers, we expect Molson to
remain a significant competitor in Brazil. As of December 2003, Molson held
approximately 12.0% of volume market share in the Brazilian beer market,
according to ACNielsen.

          Schincariol is a brewer which originated in the Brazilian state of
Sao Paulo and currently has operations across the principal regions of Brazil.
Its products are generally priced at a significant discount to ours. In 2002,
Schincariol launched two new brands, Primus and Glacial, which have small
market shares. In 2003, Schincariol relaunched its core brand under the name
of Nova Schin, and through a successful advertising campaign was able to
substantially increase its market share, overtaking Molson as the second
largest brewer in Brazil. In May 2004, Schincariol filed a complaint with CADE
challenging the Interbrew-AmBev Transactions as being anti-competitive. For
further information, see "Financial Information - Consolidated Financial
Statements and Other Financial Information - Legal Proceedings.".

          The remaining 9.5% of the Brazilian beer market by volume for the
year ended December 31, 2003 was accounted for by small regional breweries.
Sales of imported beer are not significant in Brazil, due to the high costs of
shipping beer to Brazil and an import tariff of 21.5%, except for products
from Mercosur countries, which are duty-free. ACNielsen estimates that imports
accounted for less than 1% of total beer consumption by volume in 2003.
Several super-premium or global beer brands are being produced in Brazil under
license, including our Miller and Carlsberg brands and Heineken (produced by
Molson).

          Our largest competitor in each of Argentina, Uruguay and Paraguay
used to be Quinsa, which, based on our estimates, held a majority of the beer
market in each of those countries in 2002. In May 2002, we announced our
intention to acquire a significant interest in Quinsa, which was successfully
consummated on January 31, 2003. See "--Acquisition of Interest in Quinsa."
Our largest competitor in the Venezuelan market is Empresas Polar, which,
based on our estimates, held a substantial majority share of the beer market
in 2003.

          Our largest competitor in the Peruvian and Ecuadorian markets is
Grupo Bavaria, a Colombian company which controls the largest brewers in those
countries. Grupo Bavaria had a 90.5% market share in the Ecuadorian beer
market as of April 2004. In Peru, we estimate that Grupo Bavaria has close to
a 100% market share with respect to domestic beer sales.

          Our largest competitor in the Guatemalan market is Cerveceria
Centroamericana SA, which, based on our estimates, held 70% of the beer market
in 2003.

          Our largest competitor in the Venezuelan beer market is Empresas
Polar, which held 69.0% of the market as of March 2004, accordign to Caveface.


                                      51
<PAGE>


          We distribute Miller under license in Brazil. The combination of
South African Breweries plc and Miller, announced in May 2002, may impact this
distribution agreement, although no discussions have taken place so far.


          COMPETITION - SOFT DRINKS

          As with beer, soft drink producers compete for market share through
brand preference, distribution, product availability, pricing, product
packaging, consumer promotions, cooling equipment and service provided to
retail outlets, including merchandising equipment, maintenance of bottle
inventories and frequency of visits. In recent years, price discounting has
been frequently used as a means of increasing market share.

          As of 2003, The Coca-Cola Company controlled approximately 50.2% of
the Brazilian soft drinks market, according to ACNielsen. The Coca-Cola
Company owns the Coca-Cola brand, with 32.9% of the total market share,
according to ACNielsen, and the Sprite and Fanta brands, which are also strong
brands in the Brazilian flavors segment.

          Our main soft drink brands - Guarana Antarctica, Pepsi and Pepsi
Twist - had a combined market share of 13.9% in 2003, according to ACNielsen.
AmBev's other brands accounted for a 2.7% market share in 2003, according to
ACNielsen. The remaining 33.2% of the soft drink volume comes from regional
low-priced companies focusing on low-income consumers. These B-brand players
have grown considerably and some have started to invest in advertising,
including regional TV, merchandising and promotional activities.

          The Brazilian soft drink market is characterized by three pricing
tiers, with Coca-Cola and Pepsi Twist occupying the highest-priced tier due to
significant brand preference. The second pricing tier consists principally of
our Guarana Antarctica, Pepsi Cola, Sukita and Soda Limonada products, as well
as Coca-Cola's Sprite and Fanta. The remaining soft drink brands and products,
the B-brands, occupy the third tier.

          The following table sets forth average market prices for the 2-liter
PET packages for selected brands, as of December 2003:

BRAND                                                    PRICE (R$/2 LITERS)
---------                                               ----------------------

Coca-Cola............................................           R$ 2.34
Pepsi Twist..........................................              2.26
Guarana Antarctica...................................              2.06
Soda Limonada Antarctica.............................              2.06
Fanta Laranja........................................              2.04
Sprite...............................................              2.04
Sukita...............................................              2.02
7 Up.................................................              2.00
Pepsi................................................              1.92
Average Price for B-Brands                                         1.28

-------------------
Source: ACNielsen



                                      52
<PAGE>



ACQUISITION OF INTEREST IN QUINSA

          In May 2002, we announced our agreements with Quinsa to integrate
our operations in Argentina, Paraguay and Uruguay, which were finalized on
January 31, 2003. Quinsa is the largest brewer in Argentina, Paraguay, Bolivia
and Uruguay, and is present in Chile. It is also the main Pepsi bottler in
Argentina (including Gatorade and Tropicana) and Uruguay. It also has an
agreement with Nestle Perrier Vittel in Argentina for the production and sale
of the bottled water brands Eco de los Andes, Glaciar and Nestle Pureza Vital.

          The combination of assets in Argentina, Paraguay and Uruguay allowed
for the optimization of the operational process, strengthening the financial
position of both companies and giving us the ability to compete more
efficiently with other international competitors that sell their products in
the region. The improvements achieved in results were a consequence of the
synergies generated by the combination of Quinsa and our industrial assets in
Argentina, Paraguay and Uruguay, including significant savings in the purchase
of raw materials, an extensive benchmarking study comparing Quinsa`s and
AmBev`s operations and revenue management initiatives.

          We contributed our beer producing assets in Argentina, Paraguay and
Uruguay (Linthal S.A., La Luisiana S.A., Special Purpose Vehicle Salus S.A.,
CCBA S.A. and CCBP S.A. and all direct or indirect subsidiaries of these
companies) to Quinsa in exchange for 26.4 million new Class B shares issued by
Quinsa. We also, simultaneously, purchased 230.9 million Class A shares from
Quinsa's controlling shareholder, BAC, for U.S.$346.4 million. As a result, at
January 31, 2003, we held 36.1% of the voting rights in Quinsa. However,
pursuant to a shareholders agreement with BAC, we have the right, as long as
our voting interest in Quinsa does not fall below a certain threshold, to
appoint 50% of the members of Quinsa's board of directors, with the remaining
50% being appointed by BAC. Furthermore, pursuant to certain voting
arrangements with BAC, we have the right, with the same shareholder
limitations, to cast the same number of votes that BAC has at any Quinsa
shareholders meeting, which effectively gives us and BAC joint control of
Quinsa. Also, BAC has granted AmBev a call option to acquire the remaining
373.5 million Quinsa Class A Shares held by BAC in exchange for newly issued
shares of AmBev, which call option may be exercised by AmBev beginning in
April 2009 and in April of each year thereafter, and AmBev has granted BAC a
put option to sell to AmBev the remaining 373.5 million Quinsa Class A shares
held by BAC in exchange for newly issued shares of AmBev, which put option may
be exercised by BAC beginning in April 2003 and in April of each year
thereafter. The put option granted to BAC becomes immediately exercisable in
the event of a change of control of AmBev, occurring prior to January 31,
2006, and will be deemed exercised in the event of a change of control of
AmBev occurring after that date. Accordingly, BAC may seek to exercise the
put option in connection with the consummation of the Interbrew-AmBev
Transactions. With respect to both the call option and the put option, the
number of AmBev shares to be issued to BAC will be based on a formula which
will take into account the projected Earnings before Interest, Tax,
Depreciation and Amortization (EBITDA) of AmBev and Quinsa.

          Furthermore, on January 31, 2003, BAC and AmBev also acquired 6.1
million and 8.0 million shares, respectively, of QIB, a subsidiary of Quinsa,
from Heineken, which represented in the aggregate, a 15% interest in QIB and
all of the outstanding shares of QIB not owned by Quinsa. The 15% interest was
reduced to approximately 12.37% during 2003 after Quinsa contributed
additional assets to QIB in exchange for additional shares of QIB. AmBev, BAC
and Quinsa have entered into a letter agreement dated as of January 13, 2003,
with respect to the shares of QIB. Pursuant to the letter agreement, AmBev and
BAC have agreed that they will not have the right to convert their QIB shares
into Class B common shares of Quinsa and that Quinsa will have the right to
purchase the QIB shares held by AmBev and BAC for cash at fair market value,
if and when the Quinsa board of directors decides to exercise such right.

          As a result of these transactions, at January 31, 2003, our initial
economic interest in Quinsa amounted to 40.5%.



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<PAGE>

          During 2003, we acquired an additional 12.0 million Class B shares
of Quinsa in the open market as permitted by the Quinsa agreements, increasing
our total economic interest to 49.66% at December 31, 2003. As of May 2004,
our total economic interest in Quinsa was approximately 50.97%.

          In order to benefit from certain corporate taxation incentives
between Argentina and Chile, we have structured the holding in Quinsa through
two Chilean registered companies, Lambic Chile S.A. and Hohneck Chile S.A.
Please refer to "Summary - Organizational Structure".

          The acquisition of Quinsa was approved with certain restrictions by
the Comision Nacionale de Defensa de la Competencia (Argentine National
Comission for the protection of Competition - "CNDC").

          A summary of the principal restrictions imposed by the CNDC is as
follows:

          Quinsa and Ambev ("The Parties") are required to dispose of the
brands Bieckert, Palermo, Imperial and Norte, as well the brewery located in
Lujan, where the Brahma brand was produced, to an independent brewery, which
must be financially sound and which does not produce beer in the Argentinean
Market (the "Purchaser").

          The Parties are required to submit documentation to the CNDC,
evidencing their commitment to allow the Purchaser, for a period of seven
years starting on the date of the sale of the assets to the Purchaser, to have
access to Quinsa's distribution network in Argentina.

          The Parties must commit the Purchaser to produce the Bieckert,
Palermo and Imperial brands, for a two-year period, as from the date on which
such assets are sold.

          As a consequence of the legal action filed by a subsidiary of the
Compania Cervearias Unidas S.A. (CCU) group in April 2003, through which it
claimed the right to participate in the process of the acquisition of the
assets of Cympay and Salus, compliance with the restrictions has been delayed.

          The results and financial position of Quinsa were consolidated
proportionately in our Brazilian GAAP consolidated financial statements as
from January 31, 2003. For further information on the impact of this on our
business, please see "Operating and Financial Review and Prospects -
Accounting Aspects of the Quinsa Transaction".

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<PAGE>



         Operations of Quinsa

          Quinsa is a Luxembourg-based holding company which controls 87.63%
of the outstanding shares of QIB. The remaining 12.37% interest in QIB is held
by BAC and AmBev, which hold 5.32% and 7.05%, respectively.

          Quinsa, through QIB, controls beverage and malting businesses in
five Latin American countries. Its beer brands are strong market leaders in
Argentina, Bolivia, Paraguay and Uruguay and have a presence in Chile.
Further, pursuant to a license agreement entered into with AmBev on January
31, 2003, Quinsa received the exclusive rights to produce and sell AmBev
brands in Argentina, Bolivia, Chile, Paraguay and Uruguay. Similarly, under a
distribution agreement entered into between Quinsa and AmBev also on January
31, 2003, AmBev has the exclusive right to distribute Quinsa's brands in
Brazil.

          In the soft drinks market, Quinsa has bottling and franchise
agreements with PepsiCo, which account for 100% of PepsiCo beverage sales in
Uruguay and more than 80% of PepsiCo beverage sales in Argentina. Soft drink
sales in Argentina attained nearly 5.9 million hectoliters in 2003.

          After Heineken terminated its relationship with Quinsa in January
2003, Heineken announced in April 2003 an agreement with the Schorghuber Group
to acquire a 50% interest in Inversiones y Rentas S.A., the holding company
that holds a majority of the voting rights of Companias Cervecerias Unidas
S.A., Quinsa's principal competitor in the Argentine and Chilean beer markets.
As a consequence of that transaction, Quinsa and Heineken terminated their
agreement which gave Quinsa the right to produce and sell Heineken brand in
Argentina, Bolivia, Chile, Paraguay and Uruguay.

          For the year ended December 31, 2003, 76.6% of Quinsa's sales was
attributable to sales of beer. The beer business in each of Quinsa's countries
of operation was characterized by strong competition among the major brewers.
In recent years these major competitors had expanded into new markets, engaged
in intensive advertising and promotional campaigns and introduced new brands.
The acquisition of our interest in Quinsa in January 2003, however, has
impacted the competitive environment in the markets in which Quinsa operates
as this alliance combines the two largest beer companies in Argentina,
Paraguay and Uruguay. As of December 2003, Quinsa's breweries enjoyed leading
market shares of 80.0% in Argentina, 94.3% in Paraguay, 98.5% in Uruguay and
approximately 97.3% in Bolivia. In Chile, Quinsa's market share was 10.0%.


          JOINT VENTURES AND STRATEGIC ALLIANCES

          Souza Cruz

          On November 30, 2000, we announced the formation of a joint venture
with Souza Cruz S.A. (a subsidiary of British American Tobacco plc) to manage
the purchase of indirect materials that are not strategic to the production
process, and of services, through a "B2B - Business to Business" portal over
the Internet. The purpose of this initiative is to create benefits for the
supply chain, choosing the best practices, optimizing processes, rationalizing
costs and promoting the access of all and any suppliers to the purchasing
companies, obtaining better competitive conditions and guaranteeing the
transparency of the transactions.


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          Dado Bier

          As part of our compliance with our performance agreement with CADE,
we entered into a four-year agreement in September 2001 with Dado Bier, to
distribute Dado Bier beer in Brazil. We selected Dado Bier after conducting a
public bidding process for the sharing of our distribution network in
accordance with performance agreement. Dado Bier will pay a commission for
using our distribution network.

          Pepsi

          In 1997, we acquired Pepsi-Cola Engarrafadora Ltda. and PCE Bebidas
Ltda., PepsiCo bottlers in southern and southeastern Brazil, and at the same
time acquired the exclusive rights to produce, sell and distribute Pepsi soft
drink products in northeastern Brazil. In 1999, we obtained the exclusive
rights to produce, sell and distribute Pepsi soft drink products throughout
Brazil. On October 9, 2000, following the combination, we entered into a new
franchise agreement with PepsiCo which terminated the Brahma franchise
agreement and granted us sole bottler and distributor rights for Pepsi soft
drink products in Brazil. In December 2001 we expanded our partnership with
PepsiCo to include the production, sale and distribution of Gatorade. The
Gatorade agreement has been submitted for the review of CADE. The antitrust
authorities have issued a preliminary opinion for the approval of the
transaction with no restrictions and we are currently awaiting a final
decision from CADE. See "Consolidated Financial Statements and Other Financial
Information - Legal Proceedings - Joint Ventures and Alliances". Our PepsiCo
franchise agreement expires in 2017, and, thereafter, will be automatically
renewed for additional ten-year terms absent two years' prior notice by either
party of its intent not to renew the contract following the expiration of the
initial or any subsequent term.

          In October 1999, we entered into a memorandum of understanding with
PepsiCo pursuant to which PepsiCo agreed to license or sell our leading soft
drink product, Guarana Antarctica, for bottling, sale and distribution by
PepsiCo outside of Brazil.

          Since April 2000, when CADE approved the controlling shareholders'
contribution, we have been working towards implementing the licensing or sale
of Guarana Antarctica with PepsiCo and negotiating the specific terms and
conditions of the licensing or sale of guarana concentrate or guarana soft
drinks. We have started to sell Guarana Antarctica in Portugal, Puerto Rico
and Spain through a franchising agreement with PepsiCo for the production
(using our concentrate) and distribution of Guarana Antarctica. This venture
represents less than 1% of our net sales. This agreement has similar terms and
conditions to those we have been using in licensing agreements for Pepsi
portfolio brands.

          ETCO

          On December 30, 2002, AmBev, Souza Cruz, Coca-Cola, and Sindicato
Nacional dos Distribuidores de Combustiveis (Sindicom), among other Brazilian
non-governmental entities, formed the Brazilian Institute for Ethical
Competition (ETCO - Instituto Brasileiro de Etica Concorrencial). The main
purpose of this non-profit organization is to fight tax evasion and illegal
commerce. ETCO focuses on informing the public about unfair market practices,
supporting governmental and non-governmental entities and proposing regulation
regarding this subject. AmBev has also engaged in helping federal and states
governments to fight tax evasion. The main initiative taken by AmBev, and
supported by ETCO, was the request to have the government require the
mandatory installation of flow meters in all Brazilian beer and soft drink
factories.

          In May 2004, the Brazilian government officially released a set of
technical specifications required for the regulation of flow meters installed
in brewing plants. This announcement enables companies interested in
installing flow meters to request official certification. Once the



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<PAGE>


government officially certifies the first supplier, the brewers operating in
Brazil will have up to 6 months to install flow meters in all production
lines.


          OTHER ACQUISITIONS AND DISPOSITIONS

          Salus

          On October 6, 2000, AmBev and Danone Group acquired 57.3% of the
shares of Salus, the second largest brewer in Uruguay and the local mineral
water market leader. This acquisition was structured through a joint venture,
in which Danone Group held a 73.7% stake and AmBev held the remaining 26.3%.
This acquisition involved two plants, one producing mineral water and another
producing beer. In 1999, Salus produced 190,000 hectoliters of beer and
850,000 hectoliters of mineral water. Salus produces the Patricia beer brand.
As part of the agreement with Quinsa, our 26.3% interest in the Salus joint
venture was transferred to Quinsa.

          Cympay

          On February 14, 2001, AmBev exercised its option to acquire 95.48%
of the total capital of Cerveceria y Malteria Paysandu S.A. ("Cympay"). The
interest was acquired from the German group Eufra Holding AG ("Octker") for
R$56.7 million. The rationale for this acquisition was to increase AmBev's
international presence in beer as well as to secure additional malting
capacity. The Nortena and Prinz brands were acquired in the purchase of
Cympay.

          As part of the agreement with Quinsa, the brewing assets of Cympay
were contributed to La Luisiana, the shares of which were subsequently
transferred to Quinsa.

          Pilcomayo

          In May 2001, AmBev acquired, directly and indirectly (through Pati
do Alferes Participacoes S.A.), 50.0% of voting and capital stock of
Pilcomayo, increasing our interest in Pilcomayo to 100.0%, for R$30.5 million.

          Antarctica Polar

          As of November 1, 2001, we had acquired outstanding minority
interests in Industria de Bebidas Antarctica Polar ("Polar") amounting to
R$98.4 million through a series of share repurchases that began in April 2001.
These share repurchases increased our ownership in Polar to 98.1% of the
voting capital and 97.4% of the total capital. On August 20, 2002, the
remaining shares of Polar that we did not already own were redeemed for R$6.8
million, in which increased AmBev's ownership interest in Polar to 100%. On
August 30, 2002 Polar was merged into CBB.

          Industria de Bebidas Antarctica do Norte-Nordeste (IBANN)

          AmBev completed the merger of IBANN in November 2001. The amount
paid to the minority shareholders who exercised their appraisal rights was
R$242.2 million, equivalent to 27.9% of total capital. IBANN has now been
fully merged into AmBev, and its assets and liabilities were subsequently
transferred to CBB.

          Cervejaria Astra S.A. (Astra)

          During 2002, CBB increased its participation in the total capital of
Astra from 65.5% to 96.7%, through the purchase of Aguia S.A.'s stake in Astra
and the purchase of shares from minority shareholders. The 2002 stock
purchases involved a total consideration of R$128.5 million.


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<PAGE>


          Cerveceria Internacional

          On July 10, 2001, CCBP acquired the assets of Cerveceria
Internacional in Paraguay for R$29.2 million consisting of one beer plant with
an annual installed capacity of 300,000 hectoliters, representing 15.7% of
Paraguay's annual beer consumption of 1.9 million hectoliters. As part of
AmBev's acquisition of the interest in Quinsa, our interest in CCBP was
transferred to Quinsa.

          Aguas Claras

          On September 30, 2001, CBB issued 26,958,767 preferred shares to the
shareholders of Cervejaria Aguas Claras S.A. (Aguas Claras), in exchange for
40.9% of the preferred shares and 3.0% of the total shares of Aguas Claras. On
that same date Aguas Claras was incorporated by CBB. The former minority
shareholder of Aguas Claras and current shareholder of CBB is a federal
government regional development financing agency, Fundo de Investimentos do
Nordeste ("FINOR"), which had extended lines of credit to Aguas Claras related
to its investments in the Northeast region of Brazil and currently owns 0.44%
of CBB's preferred shares.

          Miranda Correa

          In July of 2002, CBB increased its interest in Miranda Correa, a
beer company in the state of Amazonas, from 60.79% to 99.41%. CBB paid R$1.00
per share including goodwill of R$5.5 million. In 2000, certain assets
relating to the Bavaria brand owned by Miranda Correa were transferred to
Bavaria S.A. ("Bavaria"). On November 6, 2000, we entered into an agreement
providing for the sale of Bavaria to Molson Inc.; Miranda Correa, which owned
one of the plants sold to Molson, received 5.8% of the proceeds from the sale
of Bavaria; for further information on this matter see "Background on the
Company - Brazilian Antitrust Approval".

          Industrias Del Atlantico (IDA)

          AmBev recently completed the construction of a brewery in Guatemala
in partnership with CabCorp, the main Pepsi bottler in Central America.
Operations began in August 2003. Equipment for the Guatemala plant was
transferred from our other facilities in Brazil due to the overcapacity
resulting from the Brahma and Antarctica merger. On October 24, 2002, AmBev
and CabCorp, entered into a joint-venture agreement, setting forth rights and
obligations for the creation of a strategic regional alliance to collaborate
in, among other things, the production, importation, distribution, marketing
and sale of AmBev's products, especially beer, in Guatemala and other Central
American countries. On August 12, 2003, Monthiers S.A. ("Monthiers"), an
indirect subsidiary of AmBev, subscribed for 573,092 shares of common stock of
Industrias Del Atlantico S.A. ("IDA"), a Guatemalan company formerly
controlled by CabCorp, representing 50% plus one share of the outstanding
issued and outstanding common stock of IDA. As consideration, Monthiers
contributed to IDA U.S.$ 7.2 million in debt of IDA relating to credits that
CBB held against IDA in connection with the import by IDA of certain goods and
equipment from CBB that had been transferred to Monthier. IDA produces beer in
Guatemala under the trade name of Cerveceria Rio.

          Compania Cervecera AmBev Peru S.A.C. ("AmBev Peru")

          On February 19, 2003, we announced our decision to enter into the
Peruvian beer market through the construction of a production facility and a
distribution network. The new plant will serve the local market and export to
certain neighboring countries, such as Ecuador. Our decision to pursue a
greenfield project in Peru is based on the potential growth of that market,
our strategy to expand in Latin America, our knowledge and experience in the
launch of greenfield projects, and the relatively low entry cost.



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          On October 31, 2003, through our subsidiary Compania Cervecera AmBev
Peru A.C ("AmBev Peru"), AmBev acquired certain assets of Embotelladora Rivera
in Peru for approximately R$86.7 million. These assets include two soft drinks
plants, which combined have an estimated production capacity of 6.3 million
hectoliters per year, and other sales and distribution assets in Lima.
Contemporaneously with this acquisition, AmBev became PepsiCo's exclusive
bottler for Northern Peru and Lima. Embotteladora Rivera will sell and
distribute our beer and soft drinks products in Northern Peru. AmBev expects
to have a fully operational beer plant in Peru during 2005.

          Cerveceria Suramericana

          In December 2003, we acquired 80% of the capital of Cerveceria
Suramericana, the second largest brewer in Ecuador, for approximately R$105.6
million. Through its Biela brand, Cerveceria Suramericana currently holds
approximately 7.0% of the Ecuadorian beer market, according to our estimates.
AmBev's plan is to leverage Cerveceria Suramericana's operations to launch a
brand of its own in Ecuador.

          Embotelladora Dominicana CXA ("Embodom")

          On February 12, 2004, we announced an alliance with Embodom, a Pepsi
bottler in the Dominican Republic, in order to jointly produce and market beer
and soft drinks in the Dominican Republic. AmBev agreed to pay R$204.9 million
for 51% of Embodom's total capital. In addition, AmBev expects to build a beer
plant in the region of Santo Domingo, which will be contributed to Embodom in
exchange for an additional shares that will raise AmBev's stake in Embodom to
66%.


          Other restructuring transactions.

          On June 11, 2001, CBB spun off its 99.9% interest in the voting and
total share capital of Eagle to AmBev against a R$1,530.8 million reduction in
the share capital of CBB without affecting the number of shares of CBB. The
spin-off sought to optimize income and other tax benefits within our corporate
restructuring program. AmBev continued to own 100% of the voting and total
share capital of CBB immediately after the spin-off. In July 2003, the shares
of Eagle held by AmBev were transferred back to CBB in an attempt to optimize
income and tax benefits.

          Prior to Brahma's merger into Antarctica, we restructured the assets
and liabilities of certain subsidiaries. The principal components of the
restructuring were the transfer of substantially all the assets and
liabilities of CRBS S.A., PepsiCo Engarrafadora Ltda. and Cervejarias Reunidas
Skol to Brahma as of October 31, 2000.

          We have also made a number of other smaller acquisitions in recent
years.


          THE OPERATIONS STRUCTURE AT AMBEV

          As a result of an internal restructuring in 2002, the Manufacturing,
Logistics, Procurement, and Human Resources areas were grouped under a new
managerial structure named Operations. Although each of these areas maintains
its own executive officer and staff, there is a growing effort to better
integrate their activities and take advantage of their synergies. AmBev
believes this integration will not only facilitate the management of its
complex operations but also generate better results by sharing
responsibilities and more rapidly responding to market needs.



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          PRODUCTION AND AVAILABILITY OF RAW MATERIALS

          Beer and soft drink production

          Beer production involves several raw material and production stages.
The main ingredient in beer is malt, which is produced by germinating and
roasting barley in a process called "malting". Malt is mixed with water, hops
and adjuncts (corn grits or rice, for instance) in the proportions necessary
to obtain the desired taste. The resulting mixture is called "wort". Wort is
fermented with selected yeasts to produce beer, which is then filtered and
bottled. In addition to these natural ingredients, delivery of the product to
consumers requires packaging such as bottles, aluminum or steel cans, labels
and crown caps. The majority of the beer brands share the same production
process until the filtration stage, relatively late in the brewing process,
which increases efficiency and allows for a better quality control.

          Soft drinks are produced by mixing water, flavored concentrate and
sugar or sweetener. Water is processed to eliminate mineral salts and filtered
to eliminate impurities. Purified water is combined with processed sugar or,
in the case of diet soft drinks, with artificial sweeteners, and concentrate.
Carbon dioxide gas is injected into the mixture to produce carbonation.
Immediately following carbonation, the mixture is bottled.

          For information on our production facilities, see "- Property, Plant
and Equipment".

          Raw materials

          AmBev's Procurement department has a centralized structure divided
in six groups: Beer Raw Materials, Soft-drinks Raw Materials, Metals,
Plastics, Paper Labels and Glass Bottles, and Intermediate Raw Materials
(created in the beginning of 2003 to focus on the secondary raw materials).

          The managers of these groups heavily depend on strategic sourcing to
successfully negotiate their portfolios, and they also have developed
extensive knowledge regarding the commodities purchased by AmBev. Financial
and supply chain analysis, general industry knowledge, benchmarking studies
and cost breakdown models, are some of the tools used by the department to
optimize the negotiations. Inventory levels and payment options are also
well-monitored in order to efficiently manage our working capital.

          AmBev has also a National Procurement Center to centralize the
purchase of indirect materials and services and the sales of industrial
by-products. This center was created to gain leverage and aggregate value,
delivering better results. In order to achieve the benefits of centralization,
we rely on modern technology used to exchange information between AmBev and
its suppliers, as well as an efficient on-line ordering service via AmBev's
intranet, maximizing the efficiency of order processing.

          We believe that most of our supply agreements for raw materials
contain standard commercial terms. We are not dependent on any one supplier
for a significant portion of our raw materials and the loss of any one or
limited group of suppliers would not have a materially adverse effect on our
sources of supply. In recent years, we have not experienced any material
difficulties in obtaining adequate supplies of raw materials at satisfactory
prices.

          We established a department to focus on the procurement of marketing
and advertisement products and services, searching for new and alternative
suppliers as part of our outsourcing strategy for these areas. Furthermore, in
2003, AmBev centralized the Material Requirement Planning ("MRP") of the
Material Requirement Order departments of all its plants, which has helped to
lower inventory costs.



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          Beer

          The main raw materials used in our production are: malting barley,
malt, grits, corn syrup, rice, hops and water.

     o    Barley and malt: Malt requirements are met by domestic and
          international suppliers as well as our own malting facilities. In
          2003, we purchased up to 13% of our malt outside South America, at
          prevailing market rates, which depend partially on the quality of
          the barley harvests, and the remaining 87% within South America. We
          have the capacity to produce 75% of our malt needs from our own
          malting facilities in Brazil, Argentina and Uruguay. We can either
          sell part of our malt production to third parties or use it in our
          own production. We generally contract our annual malt needs in the
          last quarter of the year for the following year's requirements. Due
          to the different geographical areas of our producers, we minimize
          exposure to weather-related harvesting problems. Market prices of
          barley and malt have been relatively volatile. We believe that
          having our agreement with the producers and corporate production
          facilities helps to mitigate the impact of price volatility in our
          operations.

     o    Hops: We use two types of hops in our beer production: hops used to
          give beer its distinctive bitter flavor, which we generally import
          from the United States, and hops used to give beer its distinctive
          aroma, which we generally import from Europe, purchasing from
          several international suppliers. Typical import contracts have a
          duration of three years.

     o    Adjuncts: Corn syrup, grits and rice are purchased locally, in
          Brazil, on a regular basis. In the event of a foreseeable decline in
          production, we anticipate our purchases in order to guarantee better
          commercial term and the supply.

     o    Water: Water represents a small portion of raw material costs. Water
          needs to be treated both before its use in the production process
          and before disposal. We obtain our water requirements from several
          sources, such as: lakes and reservoirs, deep wells located near our
          breweries, rivers adjoining our facilities and public utilities
          companies. We monitor the quality, taste and composition of the
          water we use, and treat it to remove impurities and to comply with
          our own quality standards and applicable regulations. Advances in
          technology have reduced our water consumption per hectoliter
          produced. We do not foresee any shortage in our current water
          supply. All our plants already have water treatment facilities and a
          conservation/productivity program has been successfully implemented.
          Substantially all of the water collections in AmBev's production
          facilities have the proper legal authorizations, being in compliance
          with the prevailing local laws for the management of water
          resources. Administrative penalties, such as warnings and fines may
          be imposed for the utilization of water resources without the proper
          authorization. Some states in Brazil, in which management of water
          resources through governmental agencies is more developed, are
          considering the introduction of a tax on the use of water resources.

          Soft drinks

          The main raw materials used in the production of our soft drink
products are: concentrate (including guarana extract), sugar, sweetener, water
and carbon dioxide gas. Most of these materials are obtained from local
suppliers. We also have a 505-hectare facility that provides us with 50 to 60
tons of guarana berries per year, or about 18% of our requirements, with the
remainder purchased directly from independent farmers in the Amazon region. We
produce our own concentrates for soft drink production of our proprietary
brands. The concentrate is mixed with sugar and carbonated water at our
facilities. The concentrate for Pepsi soft drink products is purchased from
PepsiCo. Brazil is the biggest producer and exporter of sugar in the world and
we therefore purchase sugar domestically.



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          Packaging

          Packaging costs are comprised of the cost of non-returnable glass
and PET bottles, aluminum and steel cans, plastic film (shrink and stretch),
paper labels, plastic closures, metal crowns and paperboard. We use financial
instruments to hedge the aluminum and sugar costs; for further information on
this matter see "Quantitative and Qualitative Disclosures About Market Risk".
For other materials, we usually set a fixed price for the period in accordance
with the prevailing macroeconomic conditions.

          Our main can suppliers are Rexam, Latapack Ball, Metalic and
Crown-Cork. We generally purchase all of the glass bottles used in packaging
of our products from St. Gobain Emballage, Owens-Illinois Glass Containers and
Companhia Industrial de Vidros. We obtain the labels for our beer and soft
drink primarily from local suppliers, mostly from Grafica, a subsidiary of the
FAHZ. Plastic closures are principally purchased from Alcoa Aluminio and
Crown-Cork. We also have a plant in Manaus that produces crown caps.

          Most of our plants have their own polyethylene terephthalate, or
PET, blowing facilities. PET is the material used to make one-way plastic
bottles for soft drinks. On-site PET blowing allows for substantial savings in
transportation and storage costs.


          PROPERTY, PLANT AND EQUIPMENT

          Our properties consist primarily of brewing, malting, bottling,
distribution and office facilities in Argentina, Brazil, the Dominican
Republic, Ecuador, Guatemala, Peru, Uruguay and Venezuela. In connection with
our acquisition of the interest in Quinsa, our beer brewing assets in
Argentina, Uruguay and Paraguay were transferred to Quinsa during 2003.

          As of December 31, 2003, we own 42 facilities, of which 36 are
beverage plants, including 14 breweries (11 in Brazil, and one each in
Venezuela, Guatemala, and Ecuador); eight soft drink plants, four in Brazil,
which produce Brahma, Pepsi and Antarctica brand soft drinks, three in Peru
and one in the Dominican Republic, which produce both Pepsi and Embodom's
proprietary brand Red Rock); and 14 mixed plants which produce both beer and
soft drinks (all 14 in Brazil). Our facilities in Nova Rio and Jacarei
accounted for 17.2% and 11.8% of our beer production in 2003, respectively.
Our facilities in Jundiai, Nova Rio and Sapucaia accounted for 33.4%, 13.5%
and 13.1% of our soft drinks production in 2003 , respectively. On October 31,
2003, we acquired certain assets of Embotelladora Rivera in Peru, including
two soft drinks plants, which combined have an estimated production capacity
of 6.3 million hectoliters per year. Our mineral water plant in Bahia, Brazil,
was closed during 2003.

          In 2003, our aggregate beer and soft drink production capacity was
133.9 million hectoliters per year. In 2003, due to the seasonality of our
business, we utilized 65.6% of our beer and 47.0% of our soft drink capacity
in Brazil. Our total annual beer production capacity was 88.3 million
hectoliters, of which 84.5 million hectoliters is in Brazil, two million
hectoliters in Venezuela, one million hectoliters in Ecuador, and one million
hectoliters in Guatemala. Our assets in Argentina, Uruguay and Paraguay, with
a total capacity of approximately three million hectoliters, were transferred
to Quinsa during 2003. Our total soft drink production capacity was 37 million
hectoliters in Brazil, which includes the production of both proprietary and
Pepsi soft drinks, six million hectoliters in Peru, and two million
hectoliters in the Dominican Republic.

          We own all of our facilities in Brazil. The facilities and/or
equipment in Agudos, Jacarei, Minas Gerais, Nordeste, Aguas da Serra, Aguas
Claras (Sergipe), Aguas Claras do Sul, Nova Rio, Brasilia, Teresina, Goiania,
Manaus, Montenegro, Aquiraz, Santa Catarina, Cebrasa, Curitiba, Natal,
Jacarepagua, Jundiai and Sapucaia branches are encumbered by mortgages to
secure long-term loans from BNDES, as


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well as from other lenders. The mortgages were provided in connection with
financing provided to Brahma and Antarctica to modernize their plants.

          We also own and operate four malt plants, one of which is in Brazil
(Maltaria Navegantes), one in Argentina (Malteria Pampa S.A.) and two in
Uruguay (Malteria Uruguay S.A. and Cympay S.A.); one concentrate plant; one
crown cap production facility; 490 hectares of agricultural land, which we use
for Guarana production and research (see more details under " - Research &
Development and Knowledge Management") and; three barley-growing facilities.

          In addition, we rent office facilities in Sao Paulo. The following
is a list of our principal production facilities:

Brazil:

Plant                                                             Type of Plant

Agudos, Sao Paulo                                                 Beer
Brasilia, Federal District                                        Beer
Curitiba, Parana                                                  Beer
Equatorial, Maranhao                                              Beer
Estrela, Rio Grande do Sul                                        Beer
Goiania, Goias                                                    Beer
Jacarei, Sao Paulo                                                Beer
Lages, Santa Catarina                                             Beer
Montenegro, Rio Grande do Sul                                     Beer
Natal, Rio Grande do Norte                                        Beer
Aguas da Serra, Sao Paulo                                         Beer

Aguas Claras, Sergipe                                             Mixed
Aquiraz, Rio Grande do Norte                                      Mixed
Camacari, Bahia                                                   Mixed
Cebrasa, Goias                                                    Mixed
Cuiaba, Mato Grosso                                               Mixed
Jaguariuna, Sao Paulo                                             Mixed
Jacarepagua, Rio de Janeiro                                       Mixed
Joao Pessoa, Paraiba                                              Mixed
Nordeste, Pernambuco                                              Mixed
Nova Rio, Rio de Janeiro                                          Mixed
Manaus, Amazonas                                                  Mixed
Minas, Minas Gerais                                               Mixed
Teresina, Piaui                                                   Mixed
Aguas Claras do Sul,  Rio Grande do Sul                           Mixed

Curitibana, Parana                                                Soft drinks
Contagem, Minas Gerais                                            Soft drinks
Jundiai, Sao Paulo                                                Soft drinks
Sapucaia, Rio Grande do Sul                                       Soft drinks

Manaus, Amazonas                                                  Crown Cap
Manaus, Amazonas                                                  Concentrate
Maltaria Navegantes-Porto Alegre                                  Malt



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INTERNATIONAL:

PLANT                                                             TYPE OF PLANT
------                                                            -------------
CACN, Venezuela                                                   Beer
Cerveceria Rio, Guatemala                                         Beer
Cerveceria Suramericana, Equador                                  Beer

Lima, Peru                                                        Soft Drinks
Sullana, Peru                                                     Soft Drinks
Barranca, Peru                                                    Soft Drink
Embodom, Dominican Republic                                       Soft Drinks

Cympay, Uruguay                                                   Malt
MUSA, Uruguay                                                     Malt
Malteria Pampa, Argentina                                         Malt

          As part of the agreement relating to the acquisition of our interest
in Quinsa, in January 2003, our beer brewing assets in Argentina, Uruguay and
Paraguay were transferred as consideration to Quinsa. This transfer allowed
for the optimization of operating processes and enhancement of productivity in
Argentina, Uruguay and Paraguay.

          Two greenfield breweries are currently under construction, one in
Peru and one in the Dominican Republic, as part of our Latin American
expansion plan. More than 90% of the equipment for these plants has been or
will be transferred from other facilities in Brazil, thereby optimizing the
over-capacity that resulted from the Brahma-Antarctica integration and
increasing productivity in our plants. This strategy allows AmBev to reduce
its investment needs in new plants. In both cases, the expected investment
should amount to U.S.$38.0 million in Peru and U.S.$38.0 million in the
Dominican Republic, respectively, including production facilities, working
capital and pre-operating expenses.

          We also use under-capacity assets to reduce logistics costs in
Brazil. For example, one of our can packaging lines was transferred to our
plant in the state of Piaui during 2003, and another two are being transferred
during 2004, one to the state of Goias (Central region) and one to the state
of Maranhao (North region), reducing our total can freight costs to those
regions. Minor de-bottlenecking investments at our plants in Anapolis and
Goiania, which are expected to yield significant beer capacity increases of
11% and 15% respectively, are expected to be finished by the fourth quarter of
2004. Paysandu's malt plant (Cympay) is being expanded during 2004, increasing
its capacity from 95,000 to 130,000 tons of malt per year.


         INSURANCE

          We insure our plants and equipment against damage or loss with
recognized insurance companies. We believe that the type and amount of
insurance we carry conforms with market practices for beverage companies and
provides prudent levels of coverage for risks associated with our operations.


         LOGISTICS

          We divide our logistics management into three different dimensions:
long-term planning, short and medium-term planning and execution.

          On an annual basis, based on macro-economics trends and market
knowledge, AmBev prepares a demand forecast for the following five years. This
forecast is the primary basis of our long-term logistics planning known as the
"Director Plan", the main goal of which is to come up with the optimal plant



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footprint for this period. When running this analysis, logistics must take
into account external and internal factors such as demand forecast, plants'
capacities and efficiency evolution, transportation costs, raw materials and
labor availability, and state taxes. It is during this analysis that we make
decisions such as whether to open new plants, transfer assets, and increase or
decrease plant capacity.

          The output of our long-term planning becomes an input to our yearly
(short-term) budgeting process. We use the information generated in the
"Director Plan" to determine the volume of each SKU (Stock Keeping Unit)
produced every month at each of the plants. When running this analysis,
logistics must update the demand forecast based on the most recent information
obtained with the Sales Department. This production schedule will be the basis
for other areas' planning, particularly Manufacturing and Sourcing.

          Every month, the demand forecast for the following two months is
updated and the logistics reviews its production schedule for each of the
plants. When doing this, logistics must consider current capacity available at
each plant, inventory level, and actual transportation and production costs.
Manufacturing uses this information to adjust its daily production schedule
and finished goods inventory in order to meet demand requirements. Sourcing
uses this information to make its decisions regarding quantities to be
purchased, raw materials inventory levels, future purchasing contracts, and
hedging alternatives.

          Logistics also uses this production schedule to make our
transportation planning, taking into account lead times, costs, distances, and
product shelf lives, among other items. We use a combination of cabotage, rail
and road modals to move raw materials and finished goods between suppliers,
plants, and distributors, always trying to reach the optimal combination of
these different modals. In order to take advantage of scale and to guarantee
the optimization of routes and intermodal, we centralized our transportation
operation at our Shared Services Center.


          RESEARCH & DEVELOPMENT AND KNOWLEDGE MANAGEMENT

          AmBev brings innovation and retains knowledge to its businesses
primarily through four areas: (1) its Technological Development Center
("CDT"), (2) its Barley Development Program; (3) the Santa Helena Farm; and
(4) the Engineering Center.

          CDT

          CDT is located at the site of the beer plant in Guarulhos, which is
in the Sao Paulo Metropolitan area. CDT runs a state-of-the-art 10 hectoliters
pilot brewery that reproduces a plant in a smaller scale and allows AmBev to
run complex tests. It also has several specific laboratories to support
development activities, such as the packaging laboratory built in early 2002
after the creation of a Packaging Innovation team. These laboratories are
equipped to perform quality checks and to produce samples for internal and
consumer trials.

          As of May 2004, CDT had 18 employees, who are trained and sent to
relevant beverage events such as World Fairs. Their primary tasks are the
development of new beer and non-alcoholic beverage new products, the execution
of laboratory and sensorial analysis, the development of new specifications
for both liquids and packages, and the development of alternatives to reduce
operational costs. Because they retain great knowledge of our products and are
a self-renewing source of information to AmBev, these employees are carefully
recruited and closely monitored by our senior management.

          CDT, in association with Marketing Intelligence and Innovation
teams, is responsible for the development of new products, including both
liquid and packaging materials. In 2003, AmBev introduced three new products
in the Brazilian market: Polar Bock, a dark beer marketed in the south of
Brazil during


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the winter season; Brahma Light, an updated version of our low calorie beer
marketed under the Brahma brand; and Bohemia Weiss, the wheat beer addition to
our Bohemia brand. All innovation activities performed by AmBev, both in
Brazil and in any country AmBev operates, should necessarily be conducted by
this multi-functional group.

          Another major function of the CDT is to improve process performance
and to optimize production costs through the introduction of new raw materials
and processing aids. To do so, the CDT constantly observes the main trends in
Brewery Equipment and Production Technologies throughout the world. When an
opportunity is identified, the CDT must analyze advantages and disadvantages,
formally approve any change through a committee formed by senior managers and
monitor the introduction of changes directly in the field until the new
process is fully controlled.

          Barley Development Program

          AmBev Barley Development Program includes four experimental fields
located in Brazil, Uruguay and Argentina. The main objective of this program
is to develop new barley varieties to increase yield, improve disease
resistance, and increase malting quality and other traits of agronomic
importance. All varieties developed in this program are evaluated for brewing
performance in the CDT before being promoted to commercial levels and
therefore cultivated in large scale. As of May 2004, three AmBev varieties
occupied approximately 60% of the Brazilian area. AmBev's total barley
cultivation area in Brazil, Uruguay and Argentina was approximately 350,000
hectares and total barley production was approximately 870,000 tons.

          Santa Helena Farm

          The Santa Helena Farm, located in the Amazon Rainforest, at the
guarana growing area in the city of Maues, is an important source of research
and development for AmBev. Over the last 30 years, AmBev has been investing in
research and development to improve genetic aspects of guarana seeds at this
farm. There, we maintain the largest genetic bank of guarana varieties in the
world. This program primarily intends to: (i) increase crop productivity
(guarana production in Maues is expected to increase up to eightfold); (ii)
develop a better resistance to mold diseases, the worst disease for the
guarana plant; and (iii) supply technical assistance and distribute the
selected material to the local growers in Maues. The Maues project is also
improving the economic development in the region.

         Corporate Engineering Center

          Located at the Jacarei plant, in the state of Sao Paulo, the
Corporate Engineering Center ("CENG") is AmBev's fourth source of research and
development. The Center was created in 2001 and restructured in 2002, with the
intention of centralizing our technical expertise to facilitate the sharing
and dissemination of knowledge within our organization. In the 2002
restructuring, the Central Laboratory -- formerly in Rio de Janeiro -- was
also transferred to Jacarei, fulfilling AmBev's goal to concentrate its
technical experts at a single site. Both facilities were created after
searching, identifying, and gathering the best specialists from every
technical-related branch. Together, they total about 75 professionals from
Brazil and other Latin American countries.

          The Corporate Engineering Center's team focuses their activities on:
(i) reducing consumption of raw materials and improving losses control; (ii)
increasing quality control; (iii) increasing assets and man-hours
productivity; (iv) exploring new processes and technologies; (v) developing
new projects in accordance with the capital expenditure budget; (vi) analyzing
current and new production methods and techniques; and (vii) running internal
and external benchmarking in order to ensure that the best practices are
shared throughout AmBev.



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<PAGE>


          It is also the responsibility of the Corporate Engineering Center to
manage AmBev's relationships with its technology partners such as consulting
experts and world leading brewers. For instance, we take advantage of our
business relations with PepsiCo, Miller and Carlsberg to exchange information
regarding production technology and processes. We are already engaging in
benchmarking and sharing of "best practices" with Quinsa. In addition, we
expect that our relationship with Interbrew to provide opportunities to
achieve improvements in productivity.


          REGULATION

          General

          In Brazil, it is illegal to sell or serve alcoholic beverages to
persons under 18 years of age. There are no significant regulations, other
than compliance with standards imposed by food and health regulatory agencies,
applicable to the production and marketing of soft drinks and non-carbonated
beverages in Brazil. In addition, there are no licensing requirements for
points of sale to sell our beer and soft drink products. For a description of
the environmental regulations we are subject to, see "--
Regulation--Environmental matters".

          Notwithstanding the foregoing, initiatives to implement more
stringent regulation on the production and marketing of alcoholic beverages
have been increasing. Recently, representatives in Congress have started new
discussions on the limitation of sale and marketing of alcoholic beverages.
Most of the proposed regulation intend to reduce the consumption of alcohol
and the easy access to alcoholic beverages by the young population, by placing
new restrictions on the marketing and sale of alcoholic beverages, such as
restrictions relating to the direct association of alcoholic beverages with
sports (including the financial support of competitions, sport teams and
athletes) and the inclusion of warnings to consumers that consuming alcoholic
beverages can be harmful to their health in advertisements.

          Environmental matters

          We are subject to federal, state and local laws and regulations in
Argentina, Brazil, the Dominican Republic, Ecuador, Guatemala, Peru, Venezuela
and Uruguay relating to pollution and the protection of the environment. These
laws regulate, among other things, air and effluent emissions and require our
facilities to conform with environmental standards. Administrative, criminal
and civil penalties may be imposed for non-compliance with environmental laws.
According to Brazilian legislation, administrative fines for non-compliance
with environmental laws range from R$500.0 to R$50.0 million.

          Currently, we maintain modern effluent treatment systems in each of
our plants, which reduce organic effluents by 95%. In addition, much of our
industrial waste, which is predominantly non-hazardous in nature, is either
recycled or sold to third parties.

          In 1998, one of Antarctica's subsidiaries, Antarctica da Amazonia
S.A., entered into an agreement with the Brazilian Federal Environmental
Agency, ("IBAMA"), under which it committed to maintain and preserve certain
protected areas and native species of Brazilian nut trees and rubber trees,
which are part of the Fazenda Santa Helena property, and to restrict its use
of some herbicide and biocide products in the farming of guarana. Fazenda
Santa Helena is a cultivation site for the guarana seed, which is used as the
main raw material in the production of the guarana soft drink. One of CBB's
former subsidiaries, IBANN, was the successor to Antarctica da Amazonia S.A.'s
obligations under the agreement with IBAMA. After November 1, 2001, AmBev
assumed IBANN's obligations under the agreement pursuant to the merger of
IBANN into AmBev.



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<PAGE>


          Several years ago, we initiated an internal environmental program to
help ensure compliance with environmental regulations and, beginning in 1995,
established an integrated environmental management system by hiring and
training environmental supervisors. After the combination, this policy was
extended to Antarctica's plants. Our environmental department includes
professionals who are exclusively dedicated to the environmental management of
our plants, regularly reviewing and, if necessary, revising our environmental
policies, conducting environmental evaluations of our plants and training our
employees in environmental matters. In addition, we support environmentally
friendly projects, including recycling and urban community education projects.

          Historically, Brahma and Antarctica have made, and AmBev continues
to make, significant capital expenditures to upgrade and maintain our
facilities in compliance with applicable environmental requirements. Recent
expenditures incurred in our operations are as follows:

                                                YEAR ENDED DECEMBER 31,
                                        ---------------------------------------
                                         2003            2002            2001
                                        ------          ------          -------
                                                   (R$ in millions)

Property, plant and equipment........     9.3             2.8             5.1
Waste treatment......................    38.3            38.8            51.1

  Total..............................    47.6            41.6            56.2


          We expect to spend in 2004 amounts similar to those spent in the
year 2003 on maintaining and upgrading our facilities in upcoming years. We
believe that our current operations are in substantial compliance with
applicable environmental laws and regulations. We are, however, currently
engaged in litigation under Brazilian environmental laws and regulations
relating to some of our facilities. See "Financial Information--Consolidated
Financial Statements and Other Financial Information--Legal
Proceedings--Environmental Matters".

          Intellectual Property - Trademarks

          As of May 9, 2004, we had 536 trademarks registered with the
Brazilian Institute of Industrial Property ("INPI"), and used third-party
trademarks under specific license agreements (Miller, Carlsberg, Gatorade,
Pepsi and Lipton). All of these trademarks are protected in all material
respects in Brazil. In addition, we have registered our main trademarks or
initiated trademark registration processes in approximately 100 countries
outside of Brazil, including Argentina, Costa Rica, Ecuador, Guatemala,
Nicaragua, Puerto Rico, Peru, Portugal, Spain, the United States, Uruguay and
Venezuela in order to ensure protection of the names and logos. As of May 9,
2004 we had 1,025 trademarks registered outside of Brazil.

          Our most important trademarks, including names, are the following:
AmBev, Brahma, Brahma Chopp, Brahma Light, Skol, Skol Beats, Antarctica,
Antarctica Pilsen, Bohemia, Original, Serra Malte, Malzbier, Kronenbier,
Polar, Polar Export, Guarana Antarctica, Soda Limonada Antarctica, Agua Tonica
Antarctica, Fratelli Vita, Marathon and Nectar (registered in Brazil), Guarana
Antarctica, Brahma, Skol, Beats, Skol Beats and Antarctica (registered outside
of Brazil).

          There are no unregistered trademarks in Brazil that are material to
our business. In Brazil, trademark registration has a term of validity of 10
years, after which it can be renewed for additional 10-year periods. The
application for renewal of a trademark must be submitted to the INPI in the
last year of validity of the trademark registration, or within six months
after the trademark expiration date upon payment of an additional fee. INPI
only refuses a renewal in the event that any third party argues that the



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trademark has lapsed due to lack of use during the prior five years, and such
fact is deemed by the INPI to have been proven. We expect to apply for renewal
of registration of all of our material trademarks, so as to avoid their
expiration. We do not expect any of our material trademarks to lapse in the
near future. We believe that our significant trademarks are protected in all
material respects in the markets in which we currently operate.



          ORGANIZATIONAL STRUCTURE

          AmBev is a holding company. The bulk of our operations are conducted
through one principal operating subsidiary, CBB. Additionally, AmBev
acquired on January 31, 2003 an initial economic interest of 40.475% in
Quinsa, which is a holding company with operating subsidiaries in five
countries. AmBev's economic interest in Quinsa as of May 2004 was
approximately 50.97%.

          As a result of a restructuring performed in 2002, AmBev repurchased
the remaining minority interest in Polar and Astra.

          The following chart illustrates the ownership structure of AmBev's
principal subsidiaries as of April 30, 2004 based on total share capital
owned. For a complete list of our material subsidiaries, see Exhibit 8.1 to
this annual report.



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<PAGE>


                            ORGANIZATIONAL STRUCTURE
                  AmBev and its Principal Operating Subsidiaries


                              [GRAPHIC OMITTED]



                                      70
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Operating and Financial Review and Prospects

                               OPERATING RESULTS

INTRODUCTION

          This section contains forward-looking statements that involve risks
and uncertainties. Our actual results may differ materially from those
discussed in the forward-looking statements as a result of various factors
including, without limitation, those set forth in "Cautionary Statement
Regarding Forward- Looking Information" and the matters set forth in this
annual report generally.

          We have prepared our audited annual consolidated financial
statements as of December 31, 2003, 2002 and 2001 and for the three years
ended December 31, 2003 in Brazilian Reais in accordance with Brazilian GAAP,
which differs in certain significant respects from U.S. GAAP. The audited
financial statements included elsewhere in this annual report have been
prepared in accordance with Brazilian GAAP and include a reconciliation of net
income and shareholders' equity to U.S. GAAP, a discussion of the reconciling
differences in accounting principles, and the presentation of the U.S. GAAP
condensed balance sheets and statements of operations in Brazilian Reais.

          AmBev's discussion and analysis of its financial condition and
results of operations are based upon its primary financial statements. As a
result, the financial information and related discussion and analysis
contained in this Item are in accordance with Brazilian GAAP and figures are
in Reais, unless otherwise stated.

CRITICAL ACCOUNTING POLICIES

          Critical accounting policies are those that are both important to
the portrayal of our financial condition and results and require our
management's most difficult, subjective or complex judgments, often as a
result of the need to make estimates about the effect of matters that are
inherently uncertain. As the number of variables and assumptions affecting the
possible future resolution of the uncertainties increase, those judgments
become even more subjective and complex. In order to provide an understanding
about how our management forms its judgments about future events, including
the variables and assumptions underlying the estimates, and the sensitivity of
those judgments to different circumstances, we have identified the following
critical accounting policies:

          o    Goodwill, Intangible Assets and Amortization

          o    Pensions, Employee Benefits and the Consolidation of the FAHZ

          o    Contingencies

          o    Deferred tax

          o    Accounting for derivatives


          GOODWILL, INTANGIBLE ASSETS AND AMORTIZATION

          We have made acquisitions that included a significant amount of
goodwill and other intangible assets. The accounting for goodwill and
intangible assets under Brazilian GAAP remains unchanged, with goodwill
amortized over defined finite periods, as disclosed in note 2(j) to our
financial statements.


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<PAGE>



          Under Brazilian GAAP, net goodwill was R$1,687.3 million and R$626.9
million at December 31, 2003 and 2002, respectively. This was net of
accumulated amortization of R$680.3 million and R331.4 million, respectively,
and negative goodwill of R$176.9 million and R$149.9 million, respectively.
The amortization charge for the purposes of Brazilian GAAP was R$252.4
million for the year ended December 31, 2003 and R$105.3 million for the year
ended December 31, 2002.

          Under U.S. GAAP, net goodwill was R$253.5 million and R$249.5
million at December 31, 2003 and 2002, respectively. SFAS No. 142, "Goodwill
and Other Intangible Assets," became effective for acquisitions after June 30,
2001. This standard requires that goodwill no longer be amortized but tested
annually for impairment, and we therefore ceased to amortize goodwill as from
January 1, 2002. The amortization expense under U.S. GAAP related to goodwill
for the year ended December 31, 2001 was R$35.8 million, was nil for the years
ended December 31, 2002 and December 31, 2003. Our intangible assets with
definite useful lives continue to be amortized over the estimated useful lives
of these assets.

          Our goodwill was grouped into reporting units and tested for
impairment in 2003 and 2002 under the guidance of SFAS No. 142. Reassessment
of lives of all intangible assets and specific tests for impairment of
intangible assets with finite lives will continue to be performed annually to
determine the need for impairment provisions and whenever events or changes in
circumstances indicate that its carrying value may not be recoverable. Factors
which could trigger an impairment adjustment include the following:

               o    significant underperformance relative to expected
                    historical or projected future operating results of
                    reporting units,

               o    significant changes in the manner we used the acquired
                    assets or the strategy for our overall business or use of
                    trade names, or

               o    significant negative industry or economic trends.

          We performed the impairment test and determined that no goodwill
impairment existed at December 31, 2003 and 2002.

          EMPLOYEE BENEFITS--AND THE CONSOLIDATION OF THE FAHZ

          The FAHZ, one of AmBev's controlling shareholders, provides medical,
dental, educational and social assistance to our current and retired
employees, as well as their beneficiaries and dependents, as discussed in note
14 (c) to the financial statements included elsewhere in this report. Prior to
the combination with Antarctica, Brahma also provided the same benefits
through the BrahmaWelfare Foundation ("BWF"). The assets of BWF were merged
into the FAHZ on October 27, 2000 and the former ceased to exist.

          AmBev can contribute up to 10% of its consolidated net income to
support the FAHZ. At December 31, 2003, the FAHZ owned 24.11% of AmBev's
voting shares and 10.87% of AmBev's total shares. See "Major Shareholders and
Related Party Transactions".

          BRAZILIAN GAAP ACCOUNTING

          The FAHZ is a legally distinct entity for the purposes of Brazilian
GAAP. Under Brazilian GAAP, we do not consolidate the assets and liabilities
of the FAHZ within our financial statements. Similarly, the assets and
liabilities of the BWF were not consolidated in Brahma's financial statements.



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          Under Brazilian GAAP, we account for all benefit obligations
provided by us, including those in relation to the FAHZ, in accordance with
the IBRACON Accounting Standard and Procedure NPC No. 26, "Pensions and
Post-retirement benefits". This standard requires the comprehensive recording
of pension obligations and expenses on an actuarial basis. We elected pursuant
to NPC No. 26 to reduce shareholders' equity at December 31, 2001 to reflect
the accumulated obligation for the actuarial liability due to the FAHZ by
R$40.6 million (R$61.5 million, net of R$20.9 million deferred tax). We also
recorded against our shareholder's equity the liability related to the
benefits which we provide directly to our employees, totaling R$36.7 million
(R$55.6 million, net of R$18.9 million deferred tax). Prior to the
implementation of NPC No. 26, for the year ended December 31, 2000, AmBev and
Brahma expensed all pension and post-retirement contributions, including those
made by AmBev to the FAHZ, directly to the statement of operations on an
accrual basis without recognition of the actuarial obligation. From January 1,
2002, we recognized in income a charge to pensions and post-retirement
benefits to reflect the change in the actuarial obligation, less the fair
value of plan assets and the effect of deferrals.

          Plan assets of the AmBev Pension Fund (IAPP) include amounts
contributed by AmBev and its employees and amounts earned from investing the
contributions, less benefits paid. Following an actuarial review of the
defined benefits plan which had been closed to new participants, the net
assets at December 31, 2003 were considered to be in excess of that required
to meet the projected benefit obligation. Although AmBev will reduce future
employer contributions to the minimum permitted by law, Brazilian pension
regulations currently provide no means for returning this surplus to the
sponsor. In view of this uncertainty, on December 31, 2003, AmBev included in
the actuarial determination of the pension obligation at December 31, 2003 and
2002 a valuation allowance of R$167.1 million and R$133.6 million against the
plan assets. This allowance affected the pension charge/benefit as from 2002.

          U.S. GAAP ACCOUNTING

          Under U.S. GAAP, the assets and liabilities of the FAHZ are
consolidated within AmBev. These assets would not be distributable to
shareholders in the event of a bankruptcy. A substantial part of these assets
are represented by shares in AmBev and have been reflected as treasury shares
thereby reducing the number of outstanding shares and affecting the
determination of earnings per share under U.S. GAAP.

          Under U.S. GAAP, we account for post-retirement benefits in
accordance with SFAS No. 106 "Employees Accounting for Post-retirement
Benefits and Other Obligations". We have recorded an accrued liability, based
on independent actuarial reports at the end of each period, for the retirement
element of the obligations applicable to the FAHZ.

          Several statistical data and other factors which attempt to
anticipate future events are used in calculating the expense and liability
related to our pension and employee benefit plans. These factors include
assumptions about the discount rate, expected return on plan assets and rate
of future compensation increases as determined by us, within certain
guidelines. In addition, our actuarial consultants also use subjective
factors, such as withdrawal, turnover and mortality rates. The actuarial
assumptions we use may differ materially from our actual results, due to
changing in market and economic conditions, regulatory events, judicial
rulings, higher or lower withdrawal rates or longer or shorter life spans of
participants.


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<PAGE>



          CONTINGENCIES

          The preparation of our financial statements requires our management
to make estimates and assumptions regarding contingencies which affect the
valuation of assets and liabilities at the date of the financial statements
and the revenues and expenses during the reported period. The most significant
of these are as follows:

             LEGAL CONTINGENCIES

          We are currently involved in certain legal proceedings, as discussed
in "Financial Information--Legal Proceedings". In the future, management may
make decisions which impact the structure, operations, and staffing of the
company, which may result in further claims. Fundamental changes in economic
conditions may also result in similar restructuring strategies. We have
recorded liabilities on pending litigation based on estimates of the amounts
and the range of the losses. Unless impacted by changes in accounting
standards and practices, we intend to continue to record these liabilities in
the same manner, based on our assessment of the exposures at that time.
However, our assumptions and estimates may change in the future based on our
assessment of any given situation, which may result in changes in future
provisioning for legal claims.

             LABOR CLAIMS

          Management is required to make estimates of the potential losses on
outstanding labor claims based on the advice of external legal counsel on the
likelihood of successful outcome. When external counsels advise us that it is
probable that our case will not prevail we record provisions against these
exposures based on estimated loss amounts. Brazilian employment and labor
legislation is extensive and complex, giving rise to many claims from current
and former employees against us or our subsidiaries. These claims relate
principally to dismissals, severance, health and safety, supplementary
retirement benefits and other matters.

              TAX CONTINGENCIES

          The complexity of the Brazilian corporate fiscal environment often
results in disputes over a number of different taxes. We are currently
involved in certain tax proceedings and have filed claims to avoid payment of
taxes that we do not believe are constitutional. As discussed in note 12 to
our financial statements, we have accrued the costs for the resolution of the
losses when we consider loss of our claim to be probable. The tax
contingencies relate primarily to value-added sales and excise taxes, taxes on
revenue and income taxes and are described in detail in the financial
statements. The estimates are developed in consultation with external legal
counsel and are based upon an analysis of potential results, assuming a
combination of litigation and settlement strategies. We do not believe these
proceedings will have a material adverse effect on our financial position. It
is possible, however, that future results of operations could be materially
affected by changes in our assumptions, and the effectiveness of our
strategies with respect to these proceedings.

             UNRECOGNIZED EXPOSURES

          We have not provided for every potential legal or tax claim on the
balance sheet, but only for those in which we consider loss to be probable. We
have estimated the total exposures of possible losses, which are not recorded
as liabilities, to be R$1,266.6 million at December 31, 2003. We believe that
our estimates are based on reasonable assumptions and assessments of external
legal counsel, but should the worst case scenario develop, and we were subject
to losses in all cases, our net impact on the statement of operations would be
an expense of this amount.




                                      74
<PAGE>


             DEFERRED TAX

          We recognize deferred tax assets and liabilities based on the
differences between the financial statement carrying amounts and the tax basis
of our assets and liabilities. We regularly review the deferred tax assets for
recoverability and will only recognize these if we believe that it is probable
(under Brazilian GAAP) or more-likely-than not (under U.S. GAAP) that there
will be sufficient taxable profit against any temporary differences that can
be utilized, based on historical taxable income, projected future taxable
income, and the expected timing of the reversals of existing temporary
differences. Pursuant to CVM regulations, under Brazilian GAAP, we must
demonstrate that we will recover the tax assets discounted to present value
based on expected realization dates, within a 10-year period, even though
these credits have no prescription period for Brazilian tax law purposes.

          In the event we or one of our subsidiaries operate at a loss or are
unable to generate sufficient future taxable income, or if there is a material
change in the actual effective tax rates or time period within which the
underlying temporary differences become taxable or deductible, we evaluate the
need to establish a valuation allowance against all or a significant portion
of our deferred tax assets resulting in an increase in our effective tax rate.

          We do not record deferred tax liabilities on the earnings generated
by our foreign subsidiaries. Based on the advice of external counsel, we
concluded that these earnings are not taxable on remittance to Brazil. The
Brazilian fiscal authorities introduced new legislation in the third quarter
of 2001 to subject offshore earnings to income tax in Brazil from December 31,
2002, regardless of whether earnings have been remitted to Brazil, and to
restrict tax planning measures that had been available to companies in Brazil,
and that we have made use of in the past. We continue to believe that the
current tax initiatives that we are undertaking will not result in taxes on
these earnings, based on the advice of external counsel and we have not
therefore recorded a liability for such taxes in our financial statements. The
tax authorities, however, may challenge such procedure and, as a consequence,
may impose income tax and social contribution on the earnings accumulated
offshore.

          As part of the 1997 Pepsi transaction, we acquired the conditional
right to certain tax assets. Had we utilized the assets within the period
which expired in October 2002, 80% of the benefit would have been returned to
the seller. Under Brazilian GAAP and U.S. GAAP, we recognized 20% of the tax
asset at the time of the acquisition and recorded a valuation allowance
against the 80%. During 2002, as we were confident that it was more likely
than not that the further 80% would be recovered under U.S. GAAP, we recorded
a tax benefit of R$148.0 million in 2002 to reflect the tax loss carry forwards
no longer subject to contingent utilization. This amount was taken directly as
a benefit to the statement of operations under U.S. GAAP, as opposed to an
increase in the goodwill of the Pepsi transaction, to reflect the lifting of
the restrictions which placed recoverability in doubt. We did not record the
tax asset equivalent to 80% of the available tax losses under Brazilian GAAP
until 2003, after we met the more stringent rules of the CVM.

          Certain other tax assets arising from the Brazilian GAAP purchase
accounting adjustments at the time of the Brahma and Antarctica combination
and the subsequent downstream merger of Antarctica have not been recorded as
recovery is not presently considered probable.

          ACCOUNTING FOR DERIVATIVES

             BRAZILIAN GAAP ACCOUNTING

          We enter into foreign currency forward, swap and future contract
agreements (principally for U.S. dollars) to mitigate foreign exchange risk on
U.S. dollar-denominated debt, financing of imports and payables to foreign
suppliers. These agreements are marked-to-market and recorded at the lower of
cost plus interest and market value. The unrealized gains and losses on these
financial instruments are reported in the statement of operations and included
in "Financial income" and "Financial expenses".



                                      75
<PAGE>


          Brazilian GAAP requires us to disclose the fair value of financial
instruments at the balance sheet date but does not require us to record the
unrealized marked-to-market fair value gains in income in the year. The
estimated fair value amounts have been determined by the Company using
available market information and appropriate valuation methodologies. However,
considerable judgment is necessarily required in interpreting market data to
develop the estimates of fair value. In summary, the accounting adjustments
made to reflect our derivative operations generally fall into one of the
following three categories:

          (i) Financial instruments utilized to mitigate commodity price and
          foreign currency risk related to programmed purchases of raw
          materials are recorded at fair market value with the corresponding
          realized and unrealized gains or losses recognized in inventories.
          Gains and losses on purchases for which we have not yet taken
          delivery are included in other assets. Gains and losses are
          recognized in our results as "Cost of sales" when the corresponding
          products are sold. When these instruments are effected to mitigate
          operating expenses the results are recorded in the corresponding
          accounts.

          (ii) Other financial instruments utilized to manage foreign currency
          cash flow exposure are recorded at the lower of cost or market and
          the realized and unrealized gains and losses on these financial
          instruments are reported in the statement of operations as Financial
          income and Financial expenses.

          (iii) In the event we decide to cancel the effect of the swaps, we
          at times enter into contracts with corresponding offsetting
          positions, with an identical value at maturity, and settlement date
          and restatement index. This procedure is more cost efficient than
          entering into new hedge contracts. These financial instruments are
          measured and recorded based on the lower of fair value or cost plus
          accrued interest (the yield curve).

             Commodities

          Financial instruments used to mitigate commodity price risk are
recorded at cost plus accrued interest. Unrealized gains at December 31, 2003
on outstanding contracts totaled R$1.2 million and will be recognized in
the statement of operations when the products are sold. Realized losses on
commodity contracts closed during 2003 amounted to R$82.3 million and these
were recognized as Cost of Sales in the statement of operations to match the
associated commodity currency cost.

             Interest and Foreign Currencies

          The fair values of these financial assets provide a shelter for the
currency and interest rate risks accruing from the financial liabilities.
Although the Company's intention is to maintain these assets, they could be
realized at the Company's discretion. Should these instruments be settled only
on their respective maturity dates, the negative effect between the market
value and estimated yield curve of the instruments would be totally
eliminated. Had the Company been able to adopt the same criterion to recognize
its financial liabilities at market value, it would have presented an
unrealized pre-tax loss of approximately R$202.2 million at December 31, 2003
as follows:



                                      76
<PAGE>


<TABLE>
<CAPTION>


FINANCIAL LIABILITIES                   BOOK VALUE     FAIR  VALUE     UNREALIZED GAIN (LOSS)
<S>                                     <C>            <C>             <C>
Notes                                    R$2,942.9       R$3,270.7                   R$(327.8)
Syndicated loan                            1,063.0           938.7                      124.3
Raw material financing                       115.0           113.7                        1.3
                                    ---------------  --------------   ------------------------
                                         R$4,120.9       R$4,323.1                   R$(202.2)
                                    ---------------  --------------   ------------------------
</TABLE>


          U.S. GAAP ACCOUNTING

          All derivative financial instrument agreements are marked-to-market
and the realized and unrealized gains and losses on these financial
instruments used to manage foreign currency and commodity price cash flow
exposures are reported in the statement of operations and included in
"Financial income" and "Financial expenses". We have not classified any of our
derivative transactions as cash flow or fair value hedges to date.

          The Company believes that swap quotations obtained are reasonable
when compared with information on similar financial instruments traded in the
Bolsa de Mercadorias & Futuros (BM&F) and that the internally developed
valuation methodology is consistent with methodologies used by other
participants in the swap market in Brazil and its results reasonably reflect
the amount that would be paid or received to settle the swap on the valuation
date.

          Intense volatility in the foreign exchange and interest rate markets
in Brazil observed during 2002 has caused significant changes in forward rates
and interest rates over very short periods of time, generating significant
changes in the fair value of such cross-currency interest rate swaps over such
periods.

          Consolidation of less than majority owned subsidiaries

          Under Brazilian GAAP, we record joint-ventures, including investees
in which we share control through our participation in a stockholders'
agreement under the proportional consolidation method.

          For purposes of U.S. GAAP, the subsidiaries that are accounted for
under Brazilian GAAP on a proportional consolidation basis are recorded as
equity in affiliates under the equity method of accounting.

          We do not have any variable interest entities at December 31, 2003
which would be required to be consolidated under the provisions of FASB's
Financial Interpretation Fin 46-R "Consolidation of Variable Interest Entities
(revised December 2003)".


U.S. GAAP RECONCILIATION

          Our net income in accordance with Brazilian GAAP was R$1,411.6
million in 2003, R$1.510.3 million in 2002 and R$784.6 million in 2001. Under
U.S. GAAP, we would have reported net income of R$1,689.4 million in 2003,
R$1,642.2 million in 2002 and R$840.1 million in 2000.

          Our shareholders' equity in accordance with Brazilian GAAP was
R$4,308.2 million in 2003, R$4,129.6 million in 2002 and R$3,363.4 million in
2001. Under U.S. GAAP, we would have reported shareholders' equity of
R$4,382.9 million in 2003, R$3,960.6 million in 2002 and R$2,839.9 million in
2001.

          The principal differences between Brazilian GAAP and U.S. GAAP that
affected our net income in 2001, 2002 and 2003, as well as shareholders'
equity at December 31, 2001, 2002 and 2003, relate to the treatment of the
following items:

          o    Under Brazilian GAAP, the combination of the two predecessor
               companies Brahma and Antarctica was accounted for as a merger
               at a book value; for the purposes of U.S. GAAP, the transaction
               was treated as an acquisition by Brahma of Antarctica at fair
               market value;

          o    Under Brazilian GAAP, goodwill arises from the difference
               between the amount paid and the book value of the net assets
               acquired. Under U.S. GAAP, fair values are assigned to


                                      77
<PAGE>



               assets, call option and liabilities in business combinations,
               including intangible assets and unallocated goodwill. Non-cash
               consideration paid under U.S. GAAP, when the consideration
               includes assets contributed, shares and put options, is
               determined based on fair values. The changes in the fair value
               of the BAC put option were recorded in income;

          o    Under Brazilian GAAP inflation accounting was discontinued
               effective January 1, 1996. Prior to that date, Brazilian GAAP
               statements included indexation adjustments which partially
               accounted for the effect of inflation on property, plant and
               equipment, investments, deferred charges and shareholders'
               equity, and reported the net charge or credit in the statement
               of operations; for the purposes of U.S. GAAP, Brazil ceased to
               be treated as a highly inflationary economy only as from
               January 1, 1998. Therefore the financial information for
               purposes of U.S. GAAP for the two-year period ended December
               31, 1997 includes additional inflation restatement adjustments
               made by applying the IGP-M to permanent assets and
               shareholders' equity. This results in additional depreciation
               charges as at December 31, 2003, 2002 and 2001;

          o    Under Brazilian GAAP, Argentina (through February 2003) and
               Venezuela are accounted for as highly-inflationary economies.
               For purposes of U.S. GAAP, Venezuela ceased to be a
               highly-inflationary economy in 2001. The financial statements
               of the subsidiary in Venezuela included inflation accounting
               adjustments under Brazilian GAAP which were reversed under U.S.
               GAAP;

          o    The FAHZ, which provides medical, dental, educational and
               social assistance to current and former employees, has been
               consolidated for the purposes of U.S. GAAP to reflect the
               significant influence that we exert over the investment
               decisions of the FAHZ, in recognition that the benefits
               provided are almost exclusively to our current and former
               employees. Under Brazilian GAAP, we have not consolidated the
               FAHZ. See "--Critical Accounting Policies--Pensions, Employee
               Benefits and the Consolidation of the FAHZ";

          o    Under Brazilian GAAP, certain contractual tax related assets
               arising from the Pepsi transaction in 1997 were recognized in
               2003 when probability of recovery was assured; for purposes of
               U.S. GAAP in 2002 when realization was considered more likely
               than not, we reversed a tax valuation allowance benefitting
               earnings as most of allowance benefitting earnings as most of
               the intangible assets in respect of the Pepsi transaction had
               been amortized;

          o    Under Brazilian GAAP, advances to employees for purchase of
               shares are recorded as an asset and the interest accrued
               credited to income. Under U.S. GAAP, as the advances are
               collateralized by the stock issued under the stock ownership
               plan, the loan is reported as a deduction from shareholders'
               equity;

          o    Under Brazilian GAAP, prior to December 31, 2001, the expenses
               related to pension plans and other post-retirement benefits
               were recognized on an accrual basis only to the extent of
               required contributions for the relevant year or financial
               period. These expenses were fully recorded on an actuarial
               basis under U.S. GAAP. A valuation reserve recorded against
               surplus plan assets under Brazilian GAAP was reversed in 2002
               for purposes of U.S. GAAP;

          o    Under Brazilian GAAP, financing charges from borrowings used in
               construction were not capitalized prior to 1996; for the
               purposes of U.S. GAAP, capitalization of the interest expense
               on borrowed funds, excluding foreign exchange losses, during
               construction of major facilities is recognized as part of the
               cost of the related assets;

          o    Under Brazilian GAAP, the rights to acquire AmBev's shares
               granted to employees, officers and directors under the stock
               ownership plan do not result in any expense being


                                      78
<PAGE>


               recorded. Under U.S. GAAP, in accordance with APB 25,
               Accounting for Stock Issued to Employees, the rights to acquire
               AmBev's shares granted under the stock ownership plan is deemed
               to give rise to compensation expense to the extent of the
               excess market price of the shares over the purchase price to
               employees, officers and directors;

          o    Under Brazilian GAAP, foreign exchange gains or losses arising
               from the translation of foreign subsidiaries and investees to
               the real are recorded in earnings. For purposes of U.S. GAAP,
               these translation gains and losses are recorded as cumulative
               translation adjustments in other comprehensive income.

          o    Under Brazilian GAAP, dividends proposed by management are
               required to be accrued in our financial statements; for the
               purposes of U.S. GAAP, these may not be accrued until ratified
               by the Shareholders Meeting;

          o    Under Brazilian GAAP, goodwill is amortized; for purposes of
               U.S. GAAP, beginning on January 1, 2002, goodwill is no longer
               amortized but tested annually for impairment;

          o    There are a number of expenses and charges which can be
               capitalized and deferred under Brazilian GAAP, which are
               expensed under U.S. GAAP; and

          o    Under Brazilian GAAP, certain derivative instruments are
               recorded at the lower of cost plus accrued interest and fair
               market value. Under U.S. GAAP, SFAS No. 133, Accounting for
               Derivative Instruments and Hedging Activities requires that an
               entity recognize all derivatives as either as assets or
               liabilities and measure those instruments at fair value. As
               these transactions do not meet the requirements to qualify for
               hedge accounting under SFAS No. 133, unrealized gains are
               recorded in our results of operations under U.S. GAAP.

          Our audited financial statements included elsewhere in this report
provide for a fuller description of these differences and a reconciliation of
net income and total shareholders' equity from Brazilian GAAP to U.S. GAAP.

ACCOUNTING ASPECTS OF THE COMBINATION

          Prior to July 1, 1999, the date of the combination of Brahma and
Antarctica and the controlling shareholders' contribution, AmBev had no
material assets, liabilities or operations. For legal purposes, AmBev was
created by the merger of Brahma and Antarctica and became the successor
company as at that date. For purposes of Brazilian statutory, legal and
accounting records, we accounted for the combination in accordance with
Brazilian GAAP in a manner similar to a merger at book value. Under this
accounting method, the recorded assets and liabilities of Brahma and
Antarctica were carried over to AmBev's audited consolidated financial
statements at their historical amounts. The combination did not qualify for a
pooling-of-interests under U.S. GAAP, for which purposes the combination was
recorded using the purchase method of accounting. For U.S. GAAP purposes,
AmBev is treated as the successor to Brahma. As a result, the financial
statements of AmBev as of and for the year ended December 31, 1999 are the
financial statements of Brahma as of such date and for such period. The impact
of these differences has been included in the reconciliation to U.S. GAAP in
note 22(b) to our audited consolidated financial statements.

ACCOUNTING ASPECTS OF THE QUINSA TRANSACTION


          On January 31, 2003, we consummated the acquisition of a 40.475%
initial economic interest in Quinsa. See "Ambev Business Overview -
Acquisition of Interest in Quinsa."



                                      79
<PAGE>


          Under Brazilian GAAP we record our interest on the net assets and
financial results of Quinsa based on the proportional consolidation method
(i.e. line-by-line). For U.S. GAAP purposes our interest in Quinsa is
accounted for under the equity method for the year ending December 31, 2003.

          Quinsa is an SEC registered entity and files its financial
statements prepared in U.S. dollars under Luxembourg GAAP with a
reconciliation of shareholders' equity and net income (loss) to U.S. GAAP.

          IMPACT OF QUINSA

          The acquisition of our interest in Quinsa, consummated on January
31, 2003, is reflected in our consolidated financial statements for the year
ended December 31, 2003.

          On January 31, 2003 we acquired 37.5% of the total capital of Quinsa
from BAC and Quinsa and 8.6% of the shares of QIB from Heineken International
Beheer B.V.C. ("Heineken"). Quinsa owned at that time 85.0% of QIB. As a
result, at January 31, 2003, we had a total 40.475% economic interest in
Quinsa. During 2003, we acquired an additional 12.0 million Class B shares of
Quinsa in the open market, increasing our total economic interest in Quinsa to
47.99% at December 31, 2003. As Quinsa has repurchased some of its own shares
during 2004, our economic interest increased to 50.97% as of May 2004. For
further details on the acquisition, the business of Quinsa and anti-trust
matters, refer to "Information on the Company-Acquisition of Interest in
Quinsa." For purposes of Brazilian GAAP, beginning on January 31, 2003, Quinsa
is proportionally consolidated in our financial statements.

          Quinsa has not prepared Brazilian GAAP financial information for
2002. In order to provide comparable data to demonstrate the impact of the
acquisition of our interest in Quinsa on our results and trends in 2003, we
have included in the tables below certain key financial indicators as at
December 31, 2003 and the combination of those balances with the AmBev
balances before and after the proportional consolidation of Quinsa. Our
consolidated financial statements, prepared under Brazilian GAAP, included our
investment in Quinsa on a proportional consolidation basis (i.e.
line-by-line).


<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS                       FEBRUARY-DECEMBER 2003         YEAR ENDED DECEMBER 31, 2003
                                             -------------------------      -----------------------------
                                                                             AMBEV
                                             100% OF       AMBEV'S           WITHOUT           AMBEV
 (BRAZILIAN GAAP)                            QUINSA        SHARE(1)(2)       QUINSA (3)     CONSOLIDATED
                                             -------       ------------     -----------    --------------
                                                                  (R$ in millions)
<S>                                          <C>           <C>             <C>              <C>
Gross Sales...............................   2,542.4        1,125.1         16,018.4         17,143.5
Net Sales.................................   1,745.5          773.7          7,910.1          8,683.8
Cost of Sales.............................   (882.4)        (387.3)        (3,656.9)        (4,044.2)
Gross Profit..............................     863.1          386.4          4,253.1          4,639.6
Operating Income (4)......................     382.3          175.8          1,789.1          1,964.9
Net Income................................     316.5          149.7          1,261.9          1,411.6



BALANCE SHEET                                                      DECEMBER 31, 2003
                                             ------------------------------------------------------------

                                                                             AMBEV
                                             100% OF       AMBEV'S           WITHOUT         AMBEV
       (BRAZILIAN GAAP)                      QUINSA        SHARE(1)(2)(5)    QUINSA (3)     CONSOLIDATED
                                             -------       --------------   -----------    --------------
                                                                  (R$ in millions)

Current assets..............................   861.0         427.6          5,072.9           5,500.5
Long term assets............................   439.6         132.4          2,974.3           3,192.6
Permanent assets............................ 2,328.5       1,156.3          4,980.7           6,137.0

Short term borrowings.......................   298.3         148.1          1,828.0           1,976.1
Other short term liabilities................   477.8         237.3          2,506.6           2,743.9

</TABLE>


                                      80
<PAGE>


<TABLE>
<CAPTION>
<S>                                          <C>             <C>            <C>               <C>

Long term borrowings........................   684.1         339.7          3,664.6           4,004.3
Other long term liabilities.................   119.2          59.2          1,541.9           1,601.1

Minority Interest...........................   402.0         199.6             (3.2)            196.4
Shareholders' equity........................ 1,647.7         818.2          3,490.0           4,308.2


___________________

<FN>
(1)  AmBev's share of the unaudited consolidated results of operations and
     balance sheet of Quinsa presented under Brazilian GAAP were combined with
     the corresponding financial information of AmBev and reported in our
     audited consolidated financial statements for the year ended December 31,
     2003. For the purposes of U.S. GAAP, we report our interest in Quinsa on
     an equity accounting basis and not on a proportional consolidation basis.
(2)  Represents our economic interest in Quinsa during the eleven months from
     January 31, 2003 through December 31, 2003.
(3)  Net of adjustments arising from proportional consolidation of Quinsa.
(4)  Operating income under Brazilian GAAP is presented after financial income
     and financial expenses.
(5) Represents our economic interest in Quinsa at December 31, 2003.

</FN>

</TABLE>


          Quinsa carries out a significant portion of its business in
Argentina. Since the fourth quarter of 1998, the Argentine economy has been in
a recession, and during the second half of 2001, the recession worsened
significantly, precipitating a political and economic crisis. Recent changes
to Argentine law in connection with the economic crisis in Argentina have had
a significant impact on Quinsa's operations. As a result, historical financial
statements are not indicative of Quinsa's current financial position or
anticipated results of operations or business prospects, all of which have
been materially and adversely affected by the economic crisis since December
31, 2001.

          At December 31, 2003, a substantial portion of the financings
incurred by Quinsa's subsidiaries in Argentina was denominated in U.S.
dollars. The devaluation of the Argentine Peso and the economic crisis in
Argentina, mainly in 2002, restricted the ability of these subsidiaries to
generate sufficient cash flows to meet the obligations falling due on the
dates originally determined for liabilities denominated in foreign currency.
The management of Quinsa and its subsidiaries renegotiated the maturity terms
with financial institutions.

          As of December 31, 2003, we reclassified US$4.2 million of Quinsa's
long-term debt, with respect to which Quinsa was not in compliance with
certain covenants, to current liabilities. See "Liquidity and Capital
Resources-Long-term Debt."

          Quinsa carries out a significant portion of its business in
Argentina. Since the fourth quarter of 1998, the Argentine economy has been in
a recession, and during the second half of 2001, the recession worsened
significantly, precipitating a political and economic crisis. Recent changes
to Argentine law in connection with the economic crisis in Argentina have had
a significant impact on Quinsa's operations. As a result, historical financial
statements are not indicative of Quinsa's current financial position or
anticipated results of operations or business prospects, all which have been
materially and adversely affected since December 31, 2001. Further information
is available in Quinsa's annual report on Form 20-F for the fiscal year ended
December 31, 2003 to be filed with the SEC. Documents filed by Quinsa with the
SEC, including its 2003 Annual Report and any information therein, are not
incorporated by reference in this annual report.

OTHER ACQUISITIONS/DISPOSITIONS AND ACCOUNTING IMPLICATIONS

          Industrias Del Atlantico (IDA)

          On October 24, 2002, AmBev and The Central America Bottling
Corporation, or CabCorp, entered into a joint-venture agreement, setting forth
rights and obligations for the creation of a strategic regional alliance to
collaborate in, among other things, the production, importation, distribution,
marketing and sale of AmBev's products, especially beer in Guatemala, and
other Central American countries. On August 12, 2003, Monthiers, an indirect
subsidiary of AmBev, subscribed for 573,092 shares of common stock of
Industrias del Atlantico S.A. ("IDA"), a Guatemalan company formerly
controlled by Cab Corp, representing 50% plus one share of the outstanding
issued and outstanding common stock of IDA. As consideration, Monthiers
contributed to IDA U.S.$7.2 million in debt of IDA



                                      81
<PAGE>


relating to credits that CBB held against IDA. These credits had arisen from
the importation by IDA of certain goods and equipment from CBB and that had
been transferred to Monthiers.



                                      82
<PAGE>



          Compania Cervecera AmBev Peru A.C. (AmBev Peru)

          On October 31, 2003, through our subsidiary Companhia Cervecera
AmBev Peru S.A.C, AmBev acquired certain assets of Embotelladora Rivera in
Peru for approximately R$86.7 million. These assets include two soft drinks
plants, which combined have an estimated production capacity of 6.3 million
hectoliters per year, and other sales and distribution assets in Lima.
Contemporaneously with this acquisition, AmBev became PepsiCo's exclusive
bottler for Northern Peru and Lima. Embotteladora Rivera will sell and
distribute our beer and soft drinks products in Northern Peru. AmBev expects
to have a fully operational beer plant in Peru in the beginning of 2005.

          Cerveceria SurAmericana (Cervesursa)

          In December 2003, we acquired 80% of the capital of Cervesura,
located in Ecuador, for a total consideration of R$105.6, resulting in
negative goodwill of R$18.5 million.

          Astra

          During the months of June and July 2002, CBB, a wholly-owned
subsidiary of AmBev, increased its participation in the total capital of Astra
from 73.1% to 93.6%, through the purchase of Aguia S.A.'s stake in Astra.
Through 2002, CBB purchased shares from minority shareholders and increased
its participation in the total capital of Astra to 96.7%. The 2002 stock
purchase consideration totaled R$128.5 million, including R$94.3 million of
goodwill. During 2003, Astra was merged into by CBB as part of our tax
planning strategy, and a goodwill totaling R$146.3 million was reclassified to
deferred charges for purposes of Brazilian GAAP. No such reclassification was
made under U.S. GAAP.

          IBANN

          On November 1, 2001, the shareholders of AmBev and the minority
shareholders of IBANN, a subsidiary of CBB (and a former Antarctica
subsidiary), consummated a share exchange and approved the acquisition of the
remaining interest (35.0%) in IBANN by AmBev. AmBev issued 526,210,199 shares,
of which 96,712,635 were common shares and 429,497,564 were preferred shares
in exchange for 17.1% and 45.4% of the common and preferred shares the
minorities held in IBANN and recorded a capital increase of R$298.3 million.
On December 10, 2001, we announced that we would pay R$242.2 million to the
minority shareholders of IBANN who exercised their appraisal rights in lieu of
accepting the share exchange. Under Brazilian GAAP, we accounted for this as a
separate transaction, in effect a share buy-back, and recorded it as an
increase in treasury shares. Under Brazilian GAAP, no goodwill was recognized
on this transaction, although a capital gain of R$18.2 million was recognized
in the statement of operations to reflect the difference in the net book value
of the assets pertaining to the minority shareholders and the appraised book
value calculated in the previous three months. For the purposes of U.S. GAAP,
we believe that this transaction was inseparable from the acquisition itself
and that the capital paid to IBANN minority shareholders was part of the
consideration for the purchase.

          Bavaria

          On November 6, 2000, we entered into stock and distribution
agreements providing for the sale of Bavaria S.A. to Molson Inc. See
"Background on the Company--Brazilian Antitrust Approval". The total
contingent consideration for the sale was R$416.1 million, of which R$191.4
million was received at that time. The remaining R$224.7 million would be
payable to us by Molson subject to the Bavaria brand reaching certain market
share thresholds. We have not recorded this as an asset on the balance sheet.
Unless otherwise stated, the historical operating and financial data of AmBev
includes the operations of Bavaria through October 31, 2000.



                                      83
<PAGE>



          Pepsi

          In 1997, we acquired the Pepsi bottlers in southern and southeastern
Brazil and the exclusive rights to produce, sell and distribute PepsiCo soft
drink products in northeastern Brazil. Under Brazilian GAAP, the shareholders'
equity of these bottlers at the date of acquisition was zero, and since we
paid a nominal amount for the business, no goodwill was recognized. Under U.S.
GAAP, however, the acquisition gave rise to R$43.8 million of goodwill as of
December 31, 1997 (which was being amortized over a 10-year period). In 1999,
we obtained the exclusive rights to produce, sell and distribute PepsiCo soft
drink products throughout Brazil. See "Information on the Company--AmBev
Business Overview--Our Products and Brands--Joint Ventures and Strategic
Alliances".


EFFECT OF DIRECT DISTRIBUTION ON RESULTS OF OPERATIONS

          Historically, both Brahma and Antarctica distributed their products
through exclusive third-party distribution networks. See "Information on the
Company--Distribution and Sales". In the second half of 1997, Brahma began to
implement the direct distribution of its products. For the year ended December
31, 2003, direct distribution represented 36.9% of our net sales volumes,
compared to 32.6% and 29.6% in 2002 and 2001, respectively.

          As the proportion of our net sales made through direct distribution
rises, our results of operations are affected as follows:

          o    Net sales increases. Net sales made through direct distribution
               are greater than net sales made through third-parties. Under
               direct distribution, we receive a higher price for our products
               since third-party distribution fees are not applicable when we
               sell the products ourselves. Freight costs, absorbed by us when
               we sell to third-party distributors, are not


                                      84
<PAGE>


               deducted when sales are made under direct distribution. Since
               these cost are deducted from gross sales, the effect of greater
               direct distribution is an increase in net sales.

          o    We incur transportation costs. When we sell our products
               directly, we incur freight costs in transporting our products
               between our plant and the point of sale, which are included in
               our cost of sales under U.S. GAAP and in our direct
               distribution expenses under Brazilian GAAP.

          o    Our direct distribution expenses increase. Under the
               third-party distribution system, the salesperson is an employee
               of the distributor, while under direct distribution, the
               salesperson is our employee. As direct distribution grows, we
               incur additional direct distribution expenses from the hiring
               of additional employees which are offset by the increase in net
               sales.

          o    Our working capital needs increase. Under our direct
               distribution system, we extend limited credit to some points of
               sale, based on market rates with terms ranging from two to
               twenty one days. Accordingly, as we increase direct
               distribution to the points of sale, our receivables increase.

FOREIGN CURRENCY EFFECTS

          We have significant amounts of U.S. dollar-denominated assets and
liabilities and operating expenses denominated in or linked to U.S. dollars.
However, substantially all of our revenues are generated in Reais.

          During 2003, the appreciation of the Real (22.3% against the U.S.
dollar) had the following effects on our results of operations:

          o    As of December 31, 2003, approximately 43% of our total costs
               of sales, for our Brazilian Operations, were linked to the U.S.
               dollar. The appreciation of the Real during the year had a
               favorable effect on the cost of commodities linked to U.S.
               dollars, such as sugar, aluminum and PET resin, as well as
               imported raw materials. For risk management purposes, we
               decided to hedge a significant amount of our foreign exchange
               exposure using derivative instruments, which negatively
               impacted our costs of sales in 2003. By way of contrast,
               significant devaluations of the real (such as during 2002) have
               had an unfavorable effect on the cost of packaging such as cans
               and PET bottles as well as imported raw materials.
               Historically, we have been able to raise prices to partially
               offset the cost increase. However, during periods of rapid
               devaluation or when the rate of devaluation significantly
               exceeds that of inflation, we may not be able to raise prices
               at a rate sufficient to offset our cost increases, or to
               recover such cost increases in future periods.

          o    The effects of fluctuations in exchange rates on our U.S.
               dollar transactions (i.e., cash, cash equivalents, short-term
               investments, investments abroad, loans and the unrealized gains
               and losses from foreign currency and interest rate swap
               contracts, among others) are recorded as financial income,
               financial expense and operating income (expense), net in our
               statements of operations.

          o    As of December 31, 2003, approximately 85% of our total debt
               was denominated in U.S. dollars, which had a positive impact
               during 2003. AmBev seeks to manage its foreign currency debt
               exposure through cash investments in U.S. dollar-linked assets,
               swaps and



                                      85
<PAGE>


               derivatives instruments. In 2003, these hedging instruments
               were negatively impacted as a result of the appreciation of the
               Real during the year. However, as a result of the decrease in
               the U.S. dollar interest rates during 2003, the market value of
               our hedging instruments appreciated considerably, which had a
               positive impact on our results.

          o    We have policies designed to manage commodity and currency
               risks to protect our U.S. dollar denominated transactions and
               net assets from the significant devaluations of the Real. We
               entered into commodity and cross-currency interest rate swap
               contracts to offset gains or losses generated by our U.S.
               dollar denominated transactions and loans. These swap contracts
               were effective in mitigating the significant losses that
               otherwise would have been recorded at the time of the
               significant devaluations that have occurred since 1999 until
               2002. These foreign currency risk management policies are
               designed to take advantage of tax benefits as the gains mostly
               accrue in offshore, tax-exempt entities, where foreign exchange
               losses are tax deductible. See "Quantitative and Qualitative
               Disclosures about Market Risk".

According to Brazilian accounting principles, liabilities must be recorded on
an accrual basis rather than at market value, while assets must be recorded at
the lower of their market value or accrual value.


COMMODITIES PRICE EFFECTS

          o    AmBev has a significant exposure to fluctuations in the price
               of aluminum, which increased by approximately 18% during 2003,
               increasing our cost of sales. For risk management purposes, we
               entered into hedging agreements during 2003, which had a
               positive impact on our results in 2003. Another significant
               exposure relates to fluctuations in the price of sugar, which
               decreased approximately 40% during 2003, reducing our cost of
               sales.

TAXES

          TAXES ON INCOME.

          Income taxes in Brazil are comprised of federal income tax and
social contribution (which is an additional federal income tax). The composite
statutory rate applicable for the year ended on December 31, 2003, 2002 and
2001 was 34%. For the years of 2003, 2002 and 2001, our Brazilian GAAP
effective tax rate was a charge of 23.2% in 2003, a benefit of 23.7% in 2002,
and a charge of 6.2% in 2001.

          The major reasons for the differences between the effective tax
rates and the Brazilian composite statutory rates have been: (i) benefits
arising from tax-deductible payments of interest on shareholders' equity
without an interest charge in pre-tax income; (ii) certain non-deductible
expenses; (iii) earnings from offshore companies not subject to different
foreign tax rates; (iv) valuation allowances against net operating losses and
reversals; (v) non-taxable benefits arising from State value-added incentive
programs; and (vi) re-filings of tax returns following changes in
interpretation of certain deductions..

          Under U.S. GAAP, we recorded a benefit of R$148.0 million in 2002
corresponding to 80% of the current value of tax loss carry-forwards acquired
at the time of the Pepsi transaction in 1997 which had been subject to certain
restrictions through October 2002. Under Brazilian GAAP, which uses different
measurement criterion, this Pepsi tax asset was recorded as a credit to
results in 2003.

          TAX LOSSES AVAILABLE FOR OFFSET.

          We had recorded tax loss carryforward assets available for offset of
R$1,163.5 million as of December 31, 2003. Income tax losses available for
offset in Brazil do not expire; however, the annual offset is limited to 30%
of pretax income.

          New legislation was introduced in the third quarter of 2001 to
subject offshore earnings to income tax in Brazil regardless of whether
earnings have been remitted to Brazil and to restrict tax planning

                                      86
<PAGE>


measures that have been available to companies in Brazil, including those we
have made use of in the past. Although we do not believe that earnings that
have been accumulated offshore will be taxed, the tax authorities may
challenge our position on this matter and as a result our access to effective
tax planning measures may be restricted in the future.

          TAXES ON SALES--RECOGNITION OF BENEFIT.

          A long standing tax dispute was decided in favor of Brazilian
taxpayers on May 29, 2001 at an arbitration session of the Court of Appeals.
As a result of this decision, we reversed part of the provision for Social
Integration Program tax (PIS), a tax on gross revenues, through a credit of
R$123.8 million, and which was recorded in provisions for contingencies and
liabilities associated with legal proceedings in the year ended December 31,
2001.




                                      87
<PAGE>



YEAR ENDED DECEMBER 31, 2003 COMPARED WITH YEAR ENDED DECEMBER 31, 2002

          The following table sets forth the consolidated financial highlights
of AmBev for the years ended December 31, 2003 and 2002:

          In 2003, AmBev revised how it reports its operating results to
better reflect the expanding geographical scope of its business. Previously,
our operating results were categorized into three primary business segments:
Beer, Soft Drinks and Other Products (including NANC, by-products and malt
sales to third parties). Both Brazilian and international operations were
reflected in the results for the beer segment. In order to provide a more
meaningful presentation of AmBev's operations outside Brazil, which have
become increasingly relevant following the acquisition of our stake in Quinsa,
our reports now reflect the following four business segments:

               o    Beer Brazil

               o    CSD and NANC

               o    Other Products

               o    International Operations

          The consolidation of the first three business segments provides the
results for AmBev's operations in Brazil ("AmBev Brazil" or "Brazilian
Operations"). Since sales outside Brazil were insignificant until the end of
2002, application of our new reporting methodology to prior periods does not
result in any material changes to the reports previously made available for
those periods.


<TABLE>
<CAPTION>


                                                                             CONSOLIDATED FINANCIAL HIGHLIGHTS
                                                                         -------------------------------------------
                                                                          2003             2002            % Change
                                                                         ------           ------          ----------
                                                                          (R$ in millions, except volume amounts,
                                                                             percentages and per share amounts)
<S>                                                                       <C>              <C>             <C>
Sales volume--000 hectoliters(1)...............................            84,310          81,590              3.3
Net sales.....................................................            8,683.8         7,325.3             18.5
Net revenue per hectoliter--R$/hl..............................             103.0            89.8             14.7
Cost of sales.................................................           (4,044.2)       (3,341.7)            21.0
Gross profit..................................................            4,639.6         3,983.6             16.5
  GROSS MARGIN (%)..........................................                 53.4%           54.4%
Selling, general and administrative expenses
  Selling and marketing  expenses...........................               (847.1)         (687.2)            23.3
  Direct distribution expenses..............................               (648.6)         (537.4)            20.7
  General and administrative expenses, including directors' fees           (417.9)         (373.5)            11.9
  fees..........................................................
    Depreciation and amortization(2)..........................             (420.0)         (334.6)            25.5
                                                                         (2,333.5)       (1,932.7)            20.7
                                                                          2,306.1         2,050.9             12.4
Provisions for contingencies..................................             (187.9)         (123.7)            51.9
Other operating income, net...................................             (240.1)          199.4                -
Equity in results of affiliates ..............................               (6.2)              -                -
Net financial expenses........................................               93.1          (747.1)               -
Operating income(4) ..........................................            1,964.9         1,379.5             42.4
    OPERATING MARGIN (%)......................................               22.6%           18.8%
Net income....................................................            1,411.6         1,510.3             (6.5)
    NET MARGIN                                                               16.3%           20.6%
EARNINGS PER SHARE - R$/000 SHARES(3).........................               37.23           39.48             (5.7)


-----------------------
Amounts may not add due to rounding.

<FN>
(1)  Total beverage sales volume combines AmBev's own beverage volume with the company's ownership percentage share of volume in
     Quinsa.

(2)  Does not include depreciation recorded on production assets which is recorded within Cost of sales, nor amortization of
     goodwill which is within Other operating income, net.

(3)  Calculated based on year end number of shares, excluding treasury shares.

(4)  Under Brazilian GAAP, operating income includes net financial expense.
</FN>
</TABLE>


                                      88
<PAGE>

MARGIN ANALYSIS

     The following table sets forth certain items in our statement of
operations expressed as percentages of net sales for the years ended December
31, 2003 and 2002:


<TABLE>
<CAPTION>

                                                                      Year Ended December 31,

                                                                       2003              2002
                                                                        (%)               (%)
<S>                                                                    <C>             <C>
Net sales............................................................. 100.0           100.0
Cost of sales......................................................... (46.6)          (45.6)
Gross profit..........................................................  53.4            54.4
Selling and marketing expenses........................................  (9.8)           (9.4)
Direct distribution expenses..........................................  (7.5)           (7.3)
General and administrative expenses, including directors' fees........  (4.8)           (5.1)
Depreciation and amortization.........................................  (4.8)           (4.6)
Provision for contingencies...........................................  (2.2)           (1.7)
Other operating income, net...........................................  (2.8)            2.7
Net financial expenses................................................   1.1           (10.2)

Operating income[1]...................................................  22.6            18.8

[1] Under Brazilian GAAP, operating income includes net financial expense.


</TABLE>



FINANCIAL HIGHLIGHTS BY BUSINESS SEGMENT

          The following table sets forth certain financial highlights by
business segment for the years ended December 31, 2003 and 2002:

<TABLE>
<CAPTION>


                                                                  YEAR ENDED DECEMBER 31,
                                        -----------------------------------------------------------------------------
                                                      2003                                        2002
                                        ------------------------------------        ---------------------------------
                                                            INTERNATIONAL                              INTERNATIONAL
                                          AMBEV BRAZIL       OPERATIONS               AMBEV BRAZIL      OPERATIONS
                                        ----------------   -----------------        ----------------  ---------------
<S>                                       <S>               <C>                      <C>               <C>
Net sales..........................        7,637.7           1,046.1                  6,929.0               396.3
Cost of sales......................       (3,509.4)           (534.7)                (3,127.6)             (214.1)
Gross profit.......................        4,128.3             511.3                  3,801.4               182.2

Selling,  general and administrative
expenses...........................       (1,957.5)           (376.0)                (1,767.5)             (165.2)
                                           2,170.7             135.3                  2,033.9                17.0
Operating income

</TABLE>

          NET SALES

          Net sales increased by 18.5% for the year ended December 31, 2003 to
R$8,683.8 million from R$7,325.3 million in the same period in 2002. This
increase was not only due to growth in our Brazilian Operations, but also
growth in our International Operations, mainly as a result of the acquisition
of our stake in Quinsa and expansion into new international markets.


          BRAZILIAN OPERATIONS

          Net sales from our Brazilian Operations increased by 10.2% for the
year ended December 31, 2003 to R$7,637.7 million from R$6,929.0 million in
the same period in 2002, primarily as a result of our revenue management
initiatives, better execution at the point of sale, an increase in volumes
sold directly and certain price realignments implemented during 2003.


                                      89
<PAGE>



          BEER BRAZIL. Net sales of beer in Brazil increased by 10.2% for the
year ended December 31, 2003 to R$6,114.6 million from R$5,546.4 million in
the same period in 2002, despite a 4.7% decrease in volumes sold as a resulted
of a 2.1% decline in the Brazilian beer market, according to ACNielsen, and a
lower weighted average market share in the preiod (67.3% in the year ended
December 31, 2003 compared to 68.4% in the same period in 2002). Net sales per
hectoliter increased by 15.7% to R$110.7 in 2003 from R$95.6 in 2002, mainly
as a result of our revenue management initiatives, better brand mix, higher
volumes sold through our direct distribution network and a price realignment
implemented in June/July 2003. During the year, consumer prices for our main
brands remained in line with inflation. Other reasons for the growth in net
sales per hectoliter of Brazilian beer include: (i) the launch of new super
premium brands such as Bohemia Dark, Bohemia Weiss and Brahma Light; (ii) the
revitalization of our super premium brand Original; and (iii) further
initiatives in sales force training to help standardize and improve point of
sale execution.

          CSD&NANC. Net sales increased by 8.4% for the year ended December
31, 2003 to R$1,332.1 million from R$1,228.9 million in the same period in
2002. In the carbonated soft drink division (CSD), net sales increased by 9.9%
for the year ended December 31, 2003 to R$1,205.1 million from R$1,096.3
million in the same period in 2002, primairly as a result of 13.1% higher net
revenues per hectoliter combined with a 2.8% decrease in volumes sold.
Although total soft drink volumes sold decreased by 2.8%, our core portfolio -
Guarana Antarctica and Pepsi - volumes sold increased by 5.3% in 2003
reflecting our strategy to focus on high margin brands, as well as the
introduction of Pepsi Twist in a 2 liter PET bottle package. Net sales per
hectoliter for soft drinks increased by 13.1% for the year ended December 31,
2003 to R$68.1 in 2003 from R$60.2 in the same period in 2002, mainly as a
result of better brand mix (the percentage of our core portfolio in total
volumes sold increased to 84.7% from 78.2%), higher volumes sold through our
direct distribution network and price initiatives implemented during 2003. A
higher percentage of PET bottles in the packaging mix contributed to partially
offset the gains in net sales per hectoliter described above.

          In the non-alcoholic and non-carbonated beverage division (NANC),
net sales decreased by 4.2% for the year ended December 31, 2003 to R$127.1
million from R$132.7 million in the same period in 2002. This 4.2% decrease in
net sales reflects AmBev's strategy to focus on high margin products, mainly
Gatorade, resulting in a 23.2% decrease in volumes sold, but a 24.7% increase
in net sales per hectoliter.

          OTHER PRODUCTS.  Net sales increased by 24.2% for the year ended
December 31, 2003 to R$190.9 million from R$153.7 million in the same period
in 2002, primairly as a result of higher malt and by-products volumes sold to
third parties.

          INTERNATIONAL OPERATIONS

          Net sales increased by 164.0% for the year ended December 31, 2003,
to R$1,046.1 million from R$396.3 million in the same period in 2002,
primarily as a consequence of an adequate combination of strategic alliances,
joint ventures, greenfield projects and acquisitions, which allowed us to
expand our operations into most of South American and to initiate operations
in the Central America region. On January 31, 2003 we completed the
acquisition of our interest in Quinsa, initially obtaining an economic
interest of 40.475%. During the course of 2003, we acquired an additional 12.0
million Quinsa Class B shares through open market purchases, increasing our
economic interest in Quinsa to over 50% by the end of the year. In 2003,
Quinsa contributed net sales of R$773.7 million, or 74.0% of our International
Operations' net sales. In September 2003, we initiated our operations in the
Guatemalan beer market through our joint venture with the local Pepsi bottler,
The Central America Bottling Corporation (CabCorp). Our Guatemalan operations
contributed a net sales of R$22.0 million in 2003. In November 2003, we
acquired various assets from Embotelladora Rivera in Peru, including PepsiCo's
franchise agreement for Northern Peru and Lima, as well as two soft drink
plants in Peru and some sales and distribution assets in Lima. Our Peruvian
assets contributed net sales of R$23.6 million in 2003. Finally, in December
2003, we acquired Cerveceria SurAmericana, the second largest brewer in
Ecuador.



                                      90
<PAGE>



         COST OF SALES

          Total cost of sales increased by 21.0% for the year ended December
31, 2003 to R$4,044.2 million from R$3,341.7 million in the same period in
2002. During most of 2003 and 2002, we had currency hedge agreements in place
to manage our exposure to variable U.S. dollar-linked costs, such as costs
associated with aluminum cans, malt, hops sugar and PET resin. As opposed to
2002, however, the U.S. dollar exchange rate implicit in our currency hedge
agreements was higher than the exchange rate prevailing in the market (we
refer to this difference as the "currency hedge effect"), generating a loss of
R$99.0 million in 2003 (which had the effect of increasing our costs of sales
by R$99.0 million) as compared to a gain of R$345.7 million in 2002 (which had
the effect of reducing our costs of sales by R$345.7 million).

          As a percentage of our net sales, total cost of sales increased to
46.6% in 2003 from 45.6% in 2002.

          The following table sets forth a breakdown of total costs of sales
and cost of sales per hectoliter:

<TABLE>
<CAPTION>

                                                                            COST BREAKDOWN
                                                -----------------------------------------------------------------------
                                                    2003           2002           2003          2002         % CHANGE
                                                ---------         ------         ------        ------        ----------
                                                     (R$ in millions)                    R$/hl                  (%)
<S>                                                   <C>            <C>            <C>            <C>            <C>
BRAZILIAN OPERATIONS
Raw material................................          998.9           794.2         13.5           10.2           31.9
Packaging...................................        1,548.9         1,383.1         20.9           17.8           17.4
Labor.......................................          195.4           212.3          2.6            2.7           (3.5)
Depreciation................................          272.0           316.9          3.7            4.1          (10.0)
Other.......................................          494.2           421.2          6.7            5.4           23.0
TOTAL BRAZILIAN COST OF SALES...............        3,509.4         3,127.6         47.4           40.3           17.6
International Operations....................          534.7           214.1         52.2           54.3           (4.0)
TOTAL COST OF SALES.........................        4,044.1         3,341.7         48.0           41.0           17.1

</TABLE>

-------------------------
Amounts may not add due to rounding.


         BRAZILIAN OPERATIONS
         ---------------------

          Total cost of sales for our Brazilian Operations increased by 12.2%
for the year ended December 31, 2003 to R$3,509.4 million from R$3,127.6
million in the same period in 2002. As noted above, our cost of sales was
negatively affected by the U.S. dollar exchange rate implicit in our hedging
obligations in 2003 compared to the implicit exchange rate in 2002.

          On a per hectoliter basis, our Brazilian Operations' cost of sales
increased by 17.6% for the year ended December 31, 2003 to R$47.4/hl from
R$40.3/hl in the same period in 2002. The negative impact of the implicit
exchange rate for our cost of sales in 2003 was partially offset by our
efforts to reduce our cost of sales by: (i) reducing prices paid for raw
material, packaging and utilities through negotiation, development of new
domestic and international suppliers and tolling arrangements; (ii) increasing
conversion yields through several multifunctional initiatives and projects;
(iii) packaging engineering; (iv) process and packaging efficiency through
improved plant floor execution; and (v) reducing fixed costs through
centralization.



                                      91
<PAGE>


          BEER BRAZIL. Cost of sales for our Brazilian Beer Operations
increased by 11.9% for the year ended December 31, 2003 to R$2,503.6 million
from R$2,237.1 million in the same period in 2002, primarily as a result of
the higher U.S. dollar exchange rate implicit in our cost of sales in 2003
compared to 2002.

          On a per hectoliter basis, cost of sales for our Brazilian Beer
Operations increased by 17.5% for the year ended December 31, 2003 to
R$45.3/hl from R$38.6/hl in the same period in 2002. The primary negative
factor which affected costs of sales in 2003 was a higher percentage of
imported barely in our malt mix, mainly as a result of the poor barley harvest
in South America, as well as lower volumes, which increased the fixed cost per
hectoliter.

          CSD&NANC. Cost of sales for our Brazilian CSD&NANC Operations
increased by 9.7% for the year ended December 31, 2003 to R$887.3 million from
R$809.0 million in the same period in 2002. On a per hectoliter basis, cost of
sales increased 14.6% for the year ended December 31, 2003 to R$47.2/hl from
R$41.2/hl in the same period in 2002, primarily as a result of the higher U.S.
dollar exchange rate implicit in our costs in 2003 compared to 2002, which
more than offset the gains generated by a greater efficiency in the bottling
lines as well as a higher presence of PET bottles in our packaging mix,
instead of aluminum cans.

          INTERNATIONAL OPERATIONS
          -------------------------

          Cost of sales for our International Operations increased by 149.8%
for the year ended December 31, 2003 to R$534.7 million from R$214.1 million
in the same period in 2002, primarily reflecting our new international
operations that were expanded during 2003. On a per hectoliter basis, cost of
sales for our International Operations decreased by 4.0% for the year ended
December 31, 2003 to R$52.2/hl from R$54.3/hl in the same period in 2002,
mainly reflecting the synergies realized in connection with the transfer to
Quinsa of our assets in Argentina, Paraguay and Uruguay and improvements in
the general economic situation in Argentina during 2003.

          GROSS PROFIT

          Gross profit increased by 16.5% for the year ended December 31, 2003
to R$4,639.6 million from R$3,983.6 million in the same period in 2002. Gross
margin as a percentage of sales decreased slightly to 53.4% in 2003 from 54.4%
in 2002. All improvements achieved through our revenue management initiatives
were offset by lower volumes and the negative effect of our currency hedge
obligations on our variable dollar-linked costs.

         SELLING AND MARKETING EXPENSES

          Selling and marketing expenses increased by 23.3% for the year ended
December 31, 2003 to R$847.1 million from R$687.2 million for the same period
in 2002, primarily as a result of new International Operations commenced
during 2003. Selling and marketing expenses for our Brazilian Operations
remained almost unchanged in 2003 (R$627.9 million) compared to 2002 (R$628.5
million).



                                      92
<PAGE>


          DIRECT DISTRIBUTION EXPENSES

          Direct distribution expenses include product delivery charges and
delivery personnel required to distribute our products. Direct distribution
expenses increased by 20.7% for the year ended December 31, 2003 to R$648.6
million from R$537.4 million in the same period in 2002. Reflecting our
strategy to increase the percentage of volumes of our Brazilian Operations
sold through our direct distribution network, volumes sold directly
represented 36.9% of total volume sold in 2003, compared to 32.6% in 2002.

          On a per hectoliter basis, Brazilian Operations' direct distribution
expenses increased 18.4% for the year ended December 31, 2003 to R$22.2/hl
from R$18.7/hl for the same period in 2002. Higher freight costs, mainly a
result of higher fuel costs, along with higher fixed costs per hectoliter,
were the main reasons that negatively impacted the direct distribution
expenses per hectoliter. Higher fixed costs per hectoliter were primarily the
result of the increase in the number of direct distribution centers combined
with lower overall volumes sold, especially in the second half of the year.

          Volumes sold directly in our International Operations, mainly in
Venezuela, represented 84.4% of total volumes sold in that country for the
year ended December 31, 2003, compared to 82.1% in the same period in 2002.
Direct distribution costs per hectoliter were R$39.4/hl, in 2003, an increase
of 6.3% over the same period in 2002.

          GENERAL AND ADMINISTRATIVE EXPENSES

          General and administrative expenses increased by 11.9% for the year
ended December 31, 2003 to R$417.9 million from R$373.5 million in the same
period in 2002, primarily as a result of International Operations commenced
during 2003. General and administrative expenses for our Brazilian Operations
were R$351.6 million in 2003, roughly in line with the R$346.4 million
registered in 2002. Costs associated with the opening of new regional offices,
as well as certain one-time expenses related to information technology
projects, fully offset any cost reductions achieved through our initiatives to
reduce general and administrative expenses.

          DEPRECIATION AND AMORTIZATION

          Depreciation and amortization increased by 25.5% for the year ended
December 31, 2003 to R$420.0 million from R$334.6 million in the same period
in 2002. Brazilian Operations' depreciation and amortization increased by
16.9% for the year ended December 31, 2003 to R$372.9 million from R$319.0
million in 2002, reflecting the investments in our direct distribution network
and sub-zero coolers, which we continue to install at strategically located
high volume points of sale. During the next two to three years we will be
significantly increasing our investments in our sub-zero coolers as part of
our strategy to enhance our point of sale execution and to leverage our
distribution efficiency. Thus, depreciation should grow proportionally.
International Operations' depreciation and amortization increased by 202.3%
for the year ended December 31, 2003 to R$47.1 million from R$15.6 million in
2002, primarily as a result of the expansion of our international activities.

          Provisions for contingencies

          Net provisions for contingencies charged to the statement of
operations amounted to R$187.9 million for the year ended December 31, 2003,
compared to R$123.7 million charged in the same period in 2002. Provisions for
contingencies with respect to Brazilian Operations were 231.8 million in 2003,
mainly comprised of: (i) R$104.9 million for labor provisions; (ii) R$77.4
million for ICMS tax credit with respect to purchases of property, plant and
equipment prior to 1996, which are under dispute; (iii) R$35.2 million related
to a dispute regarding whether financial income is



                                      93
<PAGE>


subject to PIS/COFINS tax; and (iv) a provision of R$9.7 million related to
the termination of certain third-party distributor distribution agreements.

          Provisions for contingencies for International Operations were R$43.8
million, related mostly to our proportional consolidation of Quinsa.

          OTHER OPERATING INCOME (EXPENSE), NET

          Other (net) operating expenses for the year ended December 31, 2003
was R$240.1 million, compared to income of R$199.4 million in the same period
in 2002. Brazilian Operations contributed with R$230.7 million in expenses
related to: (i) foreign exchange losses in our subsidiaries abroad
(principally malting plants in Argentina and Uruguay whose functional currency
is the U.S. dollar), which totaled R$128.8 million; (ii) R$195.5 million of
goodwill amortization, mainly related to Antarctica, Astra and Quinsa; and
(iii) R$16.5 million related to the pension cost arising from the Company's
actuarial liabilities under Brazilian GAAP. Other operating income of R$175.9
million, related to tax incentives realized by AmBev's subsidiaries (mainly
CBB), and R$16.6 million, resulting from early payment of sales tax (ICMS) at
a discount, contributed to partially offset other operating expenses
associated with our Brazilian Operations.

          Other operating expenses for International Operations were R$9.4
million, mainly attributable to Quinsa's activities.

          NET FINANCIAL EXPENSES

          Our financial income consists of realized and unrealized gains from
financial instruments, foreign exchange gains (losses) on investments,
financial income on cash equivalents and others. Our financial expenses
consist of foreign exchange gains (losses) on loans, realized and unrealized
losses from financial instruments, interests and charges on loans, taxes on
financial transactions, interest on contingencies and others.

          We enter into hedging transactions to address AmBev's Brazilian
foreign currency debt exposure, which involve cash investments in U.S.
dollar-linked assets, as well as the use of swaps and derivatives. As a result
of Brazilian accounting requirements, volatility in the Real/U.S. dollar
exchange rate and interest rates can cause significant variations in financial
income and expenses.

          Financial income for the year ended December 31, 2003 was R$601.8
million, compared to R$2,530.3 million in the same period in 2002. The effect
of the appreciation of the real during 2003, resulting in losses attributable
to our cash and assets linked to the U.S. dollar (R$97.2 million) in contrast to
a gain registered in 2002 (R$1,007.2), as a result of the devaluation of real
during 2002, more than offset the positive effect of the appreciation of the
market value of certain assets during 2003, due to the decrease in the risk
aversion and also lower interest rates prevailing in the market. Pursuant to
Brazilian GAAP, we were not able to book an unrealized gain of R$205.9 million
in the market value of certain assets, as such values exceeded the
corresponding yield curve accrual values.

          Financial expenses for the year ended December 31, 2003 were R$508.7
million, compared to R$3,277.3 million in the same period in 2002. Once again,
the appreciation of the Brazilian real during 2003 accounts for this
difference. During 2002, the real devaluation negatively affected the value of
our U.S. dollar denominated debt. Conversely, the appreciation of the
Brazilian real in 2003 reduced the Real value of our U.S. dollar denominated
debt.

                                      94
<PAGE>


          OPERATING INCOME

          Operating income increased by 42.4% for the year ended December 31,
2003 to R$1,964.9 million from R$1,379.5 million in the same period in 2002.
The increase in operating income was attributable primarily to the following
factors: (i) increase in gross profit from our Brazilian Operations; (ii) the
expansion of our international activities; and (iii) the appreciation of
the Brazilian real.

          NON-OPERATING INCOME (EXPENSE), NET

          Non-operating expenses increased by 39.5% for the year ended
December 31, 2003 to R$100.7 million from R$72.2 million in the same period in
2002. Brazilian Operations non-operating expenses amounted to R$80.4 million,
mainly as a result of an expense of R$47.9 million related to losses on the
sale of fixed assets, and expenses of R$32.6 million related to Quinsa's share
buyback programs, which, despite increasing AmBev's stake in the Company, had
a negative effect on Quinsa's shareholders equity because of the difference
between the market value of Quinsa's shares over their book value.
International Operations contributed with non-operating expenses of R$20.2
million.

         INCOME TAX BENEFIT (EXPENSE)

          Our consolidated income tax and social contribution for the year
ended December 31, 2003 was a charge of R$426.1 million. At the nominal tax
rate of 34%, income tax for the year ended December 31, 2003 would have
amounted to R$625.8 million. Our effective income tax rate in the year ended
December 31, 2003 was positively affected by: (i) the benefit from tax
deductible distribution of interest attributed to shareholders' equity
(R$152.7 million); (ii) tax losses arising from the previous year (R$148.0
million), primarily from the Pepsi transaction; (iii) non-taxable equity gains
attributable to subsidiaries (R$59.8 million); and (iv) the write-off of
goodwill in connection with the merger of a subsidiary (R$37.1 million). The
losses of subsidiaries abroad not subject to taxation (R$182.9 million)
negatively affected our actual tax rate.


         PROFIT SHARING AND CONTRIBUTIONS

          Provision for employee and management profit sharing decreased by
81.1% for the year ended December 31, 2003 to R$23.7 million from R$112.3
million in the same period in 2002. The significant decrease is primarily a
result of the non-payment of performance bonuses to which certain managers and
employees would have been entitled if certain corporate goals and other
performance targets had been achieved in 2003. The R$23.7 million relates to
financial awards distributed in accordance with our Manufacturing Excellence
Program and to the proportional consolidation of Quinsa's profit sharing
program.

          MINORITY INTEREST

          Minority shareholders in our subsidiaries shared in gains of R$2.9
million for the year ended December 31, 2003, compared to losses of R$47.4
million in 2002. This change is related to the improved performance and
extension of our International Operations in 2003.

          NET INCOME

          Net income decreased by 6.5% for the year ended December 31, 2003 to
R$1,411.6 million from R$1,510.3 million in the same period in 2002.



                                      95


<PAGE>




YEAR ENDED DECEMBER 31, 2002 COMPARED WITH YEAR ENDED DECEMBER 31, 2001

          The following table sets forth the consolidated financial highlights
of AmBev for the years ended December 31, 2002 and 2001:


<TABLE>
<CAPTION>


                                                                         CONSOLIDATED FINANCIAL HIGHLIGHTS
                                                                    -------------------------------------------
                                                                        2002            2001           % CHANGE
                                                                    -----------       ---------       ---------
                                                                    (R$ in millions, except volume amounts,
                                                                       percentages and per share amounts)
<S>                                                                   <C>            <C>                <C>
Sales volume--000 hectoliters(1)...............................       81,590         81,695              (0.1)
Net sales.....................................................         7,325.3        6,525.6            12.3
Net revenue per hectoliter--R$/hl..............................           89.8           79.9            12.4
Cost of sales.................................................        (3,341.7)      (3,366.2)           (0.7)
Gross profit..................................................         3,983.6        3,159.4            26.1
    Gross margin (%)..........................................            54.4%          48.4%
Selling, general and administrative expenses
    Selling and marketing  expenses...........................          (687.2)        (707.8)           (2.9)
    Direct distribution expenses..............................          (537.4)        (467.8)           14.9
    General  and  administrative  expenses,  including                  (373.5)        (351.5)            6.3
    directors' fees...........................................
    Depreciation and amortization(2)..........................          (334.6)        (256.5)           30.4
                                                                      (1,932.7)      (1,783.6)            8.4
                                                                       2,050.9        1,375.8            49.1
Provisions for contingencies..................................          (123.7)         (33.9)          264.9
Other operating income, net...................................           199.4          152.2            31.0
Net financial expenses........................................          (747.1)        (503.1)           48.5
Operating income(4)...........................................         1,379.5          991.0            39.2
    Operating margin (%)......................................            18.8%          15.2%
Net income....................................................         1,510.3          784.6            92.5
    Net margin                                                            20.6%          12.0%
Earnings per share - R$/000 shares(3).........................            39.48          20.42           93.3


------------------
Amounts may not add due to rounding.

<FN>
(1)  Includes sales volume of beer, soft drinks and non-alcoholic non-carbonated beverages.

(2)  Does not include depreciation recorded on production assets which is recorded within Cost of sales, nor amortization of
     goodwill within Other operating income, net.

(3)  Calculated based on year end number of shares, excluding treasury shares.

(4)  Under Brazilian GAAP, operating income includes net financial expense.
</FN>

</TABLE>


                                                                 96
<PAGE>


MARGIN ANALYSIS

          The following table sets forth certain items in our statement of
operations expressed as percentages of net sales for the years ended December
31, 2002 and 2001:


<TABLE>
<CAPTION>

                                                                      Year Ended December 31,
                                                                      2002              2001
                                                                       (%)               (%)
<S>                                                                    <C>               <C>
Net sales...........................................................   100.0            100.0
Cost of sales.......................................................   (45.6)           (51.6)
Gross profit........................................................    54.4             48.4
Selling and marketing expenses......................................    (9.4)           (10.8)
Direct distribution expenses........................................    (7.3)            (7.2)
General and administrative expenses, including directors' fees......    (5.1)            (5.4)
Depreciation and amortization.......................................    (4.6)            (3.9)
Provision for contingencies.........................................    (1.7)            (0.5)
Other operating income, net.........................................     2.7              2.3
Net financial expenses..............................................   (10.2)            (7.7)

Operating income[2].................................................    18.8             15.2

</TABLE>




FINANCIAL HIGHLIGHTS BY BUSINESS SEGMENT

          The following table sets forth certain financial highlights by
business segment for the years ended December 31, 2002 and 2001:


<TABLE>
<CAPTION>

                                                                  YEAR ENDED DECEMBER 31,
                                          --------------------------------------------------------------------------
                                                      2002                                        2001
                                          --------------------------------        ----------------------------------
                                                           INTERNATIONAL                               INTERNATIONAL
                                          AMBEV BRAZIL       OPERATIONS             AMBEV BRAZIL         OPERATIONS
                                          -------------   ----------------        ----------------    --------------
<S>                                          <C>              <C>                        <C>                  <C>

Net sales..........................         6,929.0              396.3                 6,111.1               414.4
Cost of sales......................        (3,127.6)            (214.1)               (3,165.3)             (200.9)
                                          ----------           --------              ----------            --------
Gross profit.......................         3,801.4              182.2                 2,945.8               213.5
Selling,  general and administrative
expenses...........................        (1,767.5)            (165.2)               (1,598.9)             (184.6)
                                          ----------           --------              ----------            --------
                                            2,033.9               17.0                 1,346.9                28.9


[2]  Under Brazilian GAAP, operating net financial expense.

</TABLE>


          NET SALES

          Net sales increased by 12.3% for the year ended December 31, 2002 to
R$7,325.3 million from R$6,525.6 million in the same period in 2001. This
increase was primarily due to the growth of beer and CSD beverages in our
Brazilian Operations, through improved revenue management and the continued
standardization of best practices within the Skol, Brahma and Antarctica
distribution networks. International Operations in Paraguay contributed to
this increase in net sales, while performances in Argentina, Uruguay and
Venezuela were impacted by economic crisis, political uncertainty and
social-economic turmoil in those countries.

          BRAZILIAN OPERATIONS

          Net sales for our Brazilian Operations increased by 13.4% for the
year ended December 31, 2002 to R$6,929.0 million from R$6,111.1 million in
the same period in 2001, primarily as a result of the


                                      97
<PAGE>


revenue management initiatives implemented during the year in all Brazilian
beverage divisions, as well as the increase in the percentage of volume sold
through our direct distribution network.

          BEER BRAZIL. Net sales increased by 15.0% for the year ended
December 31, 2002 to R$5,546.4 million from R$4,824.5 million in the same
period in 2001, mainly as a result of revenue management initiatives and
better execution at the point of sale. Net sales per hectoliter increased
16.9% to R$95.6 in 2002 from R$81.8 in 2001 while sales volumes fell 1.7%.
During the year, consumer prices for our main brands remained in line with
inflation. Other reasons for the growth in net sales of Brazilian beer include
the increase in the proportion of direct sales, further initiatives in sales
force training to help standardize and improve point of sale execution, the
revitalization of our super premium brand Bohemia and the launch of
high-margin products, such as Skol Beats and Chopp Express, to target specific
niches in the Brazilian market.

          CSD&NANC. Net sales increased by 19.2% for the year ended December
31, 2002 to R$1,228.9 million from R$1,030.8 million in the same period of
2001. In the carbonated soft drink division (CSD), net sales increased by
13.4% for the year ended December 31, 2002, to R$1,096.2 million from R$967.0
million in the same period in 2001 as a direct result of our strategy to focus
on AmBev's core brands -- Guarana Antarctica and Pepsi -- and leverage point
of sale execution from our leading beer brands. AmBev's core brands volume
increased by 6.8% and represented 78.2% of total sales, compared to 72.4% in
2001. Sales volume for the full portfolio decreased 1.1%. Net sales per
hectoliter rose 14.6% as a result of our strategy to narrow the price gap of
our products to 5-10% below those of the market leader and the successful
launch in 2002 of Pepsi Twist, which is premium priced and achieved 1.2%
market share as of December 31, 2002. Additionally, an increase in one-way
packaging to 92.5% of sales volume in 2002, compared to 90.8% in 2001, as well
as higher levels of direct distribution, also contributed to the overall
growth in net sales per hectoliter.

          In the non-alcoholic and non-carbonated beverage division (NANC),
net sales increased by 108.2% for the year ended December 31, 2002 to R$132.7
million from R$63.7 million in the same period of 2001. The introduction of
the Gatorade brand into our portfolio was the primary reason for this
increase. NANC volumes sold increased by 70.2% in 2002, mainly driven by
isotonic sales volumes, which increased more than threefold, as well as
mineral water sales volumes, which increased 23.3%. Also, as a result of the
introduction of the Gatorade brand into our portfolio, net sales per
hectoliter increased by 22.3% for the year ended December 31, 2002 to R$92.6
from R$75.7 in the same period of 2001.

          OTHER PRODUCTS. Net sales decreased by 40.0% for the year ended
December 31, 2002 to R$153.7 million from R$255.9 million in the same period
in 2001. The removal of Molson's Bavaria brand from our distribution network
in the first half of 2002 was the primary reason for the weak performance of
this division in 2002.

          INTERNATIONAL OPERATIONS

          Net sales outside of Brazil decreased by 4.4% for the year ended
December 31, 2002 to R$396.3 million from R$414.4 million in the same period
in 2001. While sales volume grew 14.3% to 3.9 million hectoliters and the
packaging mix and increase in direct distribution positively impacted sales,
net sales per hectoliter fell as a result of significant currency
depreciation. The proportion of one-way packaging increased to 29.0% in 2002
from 15.3% in 2001. Direct sales in the cities of Buenos Aires and Caracas
accounted for 40.2% and 82.6% of total sales, respectively.

          AmBev's international segment volume growth was achieved through
market share gains in Argentina, Paraguay, Uruguay and Venezuela, as a result
of the expansion of direct sales in major cities and the replication of point
of sale execution best practices in those markets. Volume growth was also due



                                      98
<PAGE>


to the start up of our operations in Paraguay, which accounted for an
additional 0.4 million hectoliters for the full year in 2002, compared to only
39,500 hectoliters for the two months of production in 2001.

          COST OF SALES

          Total cost of sales fell by 0.7% for the year ended December 31,
2002 to R$3,341.7 million from R$3,366.2 million in the same period in 2001.
During most of 2002 our derivative financial instruments fully mitigated the
effect of the devaluation of the real on our U.S. dollar-linked costs such as
aluminum cans, malt and hops, compensating for the 21.6% average devaluation
of the Real (34.3% comparing December 31, 2002 to December 31, 2001). Our cost
of sales would have been R$345.7 million higher had we not contracted these
derivative financial instruments. The average exchange rate for the hedging
transactions was R$2.42 per U.S.$1.00, compared to a market average exchange
rate of R$2.99 per U.S.$1.00 in 2002. Total cost of sales, excluding
depreciation, increased to R$3,016.7 million in 2002, which is 0.3% above the
same period in 2001. Variable costs, which mainly include packaging (aluminum
cans and PET bottles), and raw material costs (malt, sugar and hops)
represented 70.4% and 68.9% of the total cost of sales in 2002 and 2001,
respectively.

          As a percentage of our net sales, total cost of sales decreased to
45.6% in 2002 from 51.6% in 2001.

          The following table sets forth the total cost breakdown, and cost of
sales per hectoliter:

<TABLE>
<CAPTION>


                                                                              COST BREAKDOWN
                                                  -------------------------------------------------------------------
                                                         2002         2001         2002      2001         % CHANGE
                                                  ------------     --------      -------    ------        -----------
                                                       (R$ in millions)                R$/hl                  (%)

<S>                                                    <C>          <C>            <C>         <C>           <C>
Brazilian Operations
Raw material................................             794.2        778.6         10.2       9.9            2.8
Packaging...................................           1,383.1      1,412.4         17.8      18.0           (1.3)
Labor.......................................             212.3        204.7          2.7       2.6            4.6
Depreciation................................             316.9        346.1          4.1       4.4           (7.7)
Other.......................................             421.2        423.5          5.4       5.4            0.2
Total Brazilian cost of sales...............           3,127.6      3,165.3         40.3      40.4           (0.4)
International Operations....................             214.1        200.9         54.3      58.4           (6.9)
Total Cost of Sales.........................           3,341.7      3,366.2         41.0      41.2           (0.6)

Amounts may not add due to rounding.


</TABLE>


          BRAZILIAN OPERATIONS

          Total cost of sales for our Brazilian Operations decreased by 1.2%
for the year ended December 31, 2002 to R$3,127.6 million from R$3,165.3
million in the same period in 2001. This was primarily possible due to the
derivative financial instruments put in place in 2002. In addition to the
effect of the derivative financial instruments, a decrease in Brazil Beer
sales volumes and the shift in the packaging mix toward returnable containers
for both beer and soft drinks, also positively affected our Brazilian
Operations cost of sales.

          BEER BRAZIL. Despite the impact of the devaluation of the Real on
U.S. dollar-denominated commodity prices, such as aluminum cans and malt, cost
of sales for beer decreased 1.7% for the year ended December 31, 2002 to
R$2,237.1 million from R$2,274.7 million in the same period in 2001, and cost
of sales per hectoliter remained stable at R$38.6. The main reason this
decrease was possible was due to the derivative financial instruments put in
place in 2002.

          In addition to the effect of the derivative financial instruments,
the shift in the packaging mix toward returnable containers also contributed
to the decrease in costs per hectoliter sold. As a percentage



                                      99
<PAGE>


of sales, cost of sales for beer decreased from 47.1% in 2001 to 40.3% in
2002, as costs were offset by higher net sales per hectoliter and operating
cost savings from our cost cutting program of R$43.2 million.

          CSD&NANC. Cost of sales for CSD&NANC increased by 12.6% for the year
ended December 31, 2002 to R$809.0 million from R$718.4 million in the same
period in 2001, despite the effect of the derivative financial instruments
offsetting the devaluation of the Real. The main reasons for this increase
were the shift in the packaging mix toward non-returnable containers for CSD
beverages, which represented 92.5% of sales volumes in 2002 compared to 90.8%
in 2001, as well as the introduction of Gatorade brand in our NANC portfolio.
As a percentage of sales, cost of sales for CSD&NANC decreased from 69.7% in
2001 to 65.8% in 2002.

          INTERNATIONAL OPERATIONS

          International beer operations cost of sales increased by 6.5% for
the year to December 31, 2002 to R$214.1 million from R$200.9 million in the
same period in 2001. This increase was as a result of the combination of a
14.4% higher volumes sold with a decrease of 6.9% in cost of sales per
hectoliter. Cost of sales per hectoliter decreased to R$54.3 for the year
ended December 31, 2002 from R$58.4 in the same period in2001.

          GROSS PROFIT

          Gross profit increased by 26.1% for the year ended December 31, 2002
to R$3,983.6 million from R$3,159.4 million for the same period in 2001. Gross
margin increased to 54.4% in 2002 from 48.4% in 2001. This improvement was
principally due to increased net sales per hectoliter caused by revenue
management initiatives and a higher percentage of direct sales.

          SELLING AND MARKETING EXPENSES

          Selling and marketing expenses decreased by 2.9% for the year ended
December 31, 2002 to R$687.2 million from R$707.8 million. While we reduced
fixed expenses, we maintained our continuous investments in brand equity,
including the launching of new beer products and the Guarana Antarctica
sponsorship of the Brazilian national soccer team.

          DIRECT DISTRIBUTION EXPENSES

          Direct distribution expenses include product delivery charges and
the cost of sales and delivery personnel required to distribute our products.
Direct distribution expenses increased by 14.9% for the year ended December
31, 2002 to R$537.4 million from R$467.8 million in the same period in 2001.
This growth was mainly due to higher direct sales, which accounted for 32.6%
of total sales volume in 2002, compared to 29.6% during 2001. Although the
increase in direct distribution results in higher net sales since we sell
directly to the retailer, we also assume the cost of the sales force as well
as the necessary transportation and storage expenses. As a percentage of net
sales, direct distribution expenses remained almost stable at 7.3% for the
year ended December 31, 2002.

          GENERAL AND ADMINISTRATIVE EXPENSES

          General and administrative expenses increased 6.3% for the year
ended December 31, 2002 to R$373.5 million from R$351.5 million due
principally to initiatives in optimization of processes and a corporate
restructuring, including the benefits realized through the creation of the
Shared Services Center (SSC), located at the Jaguariuna plant in Sao Paulo. By
rationalizing administrative operating activities, we expect to recognize the
benefit of further process efficiencies and fixed cost reduction in the short
term, and faster implementation of new technologies in the medium term.


                                     100
<PAGE>


          DEPRECIATION AND AMORTIZATION

          Depreciation and amortization increased by 30.4% for the year ended
December 31, 2002 to R$334.6 million from R$256.5 million in the same period
in 2001. This increase reflects both the investment in our sub-zero coolers,
which are placed at strategically located points of sale, and the investments
in direct distribution. During the next two to three years the company will be
significantly increasing its investment in our sub-zero coolers as part of our
strategy to enhance our point of sale execution and to leverage our
distribution efficiency. Thus, depreciation should grow proportionally.

          PROVISIONS FOR CONTINGENCIES

          Net provisions for contingencies charged to the statement of
operations amounted to R$123.7 million for the year ended December 31, 2002,
compared to R$33.9 million charged in the same period in 2001.

          The principal component of the provisions in 2002 includes R$120.9
million for legal exposures related to a modification of the PIS/COFINS tax
base in Brazil which should remain provisioned until final ruling. Further
legal issues arising in 2002 resulting in exposures include R$30.1 million for
labor and other legal issues, as well as R$6.5 million attributable to the
principal and fines for a pending IPI and ICMS sales taxes payment issue.

          These charges were partially offset by the reversal of ICMS
provisions from previous periods of R$8.1 million, the reversal of R$6.0
million associated with legal issues with third-party distributors and R$19.7
million for other items, all of which had been accrued in previous periods.

          OTHER OPERATING INCOME (EXPENSE), NET

          Other operating income (expense), net increased by 31.0% for the
year ended December 31, 2002 to R$199.4 million from R$152.2 million in the
same period in 2001. The principal components of other operating income in
2002 were foreign exchange gains in our subsidiaries abroad (principally
malting plants in Argentina and Uruguay whose functional currency is the U.S.
dollar), which totaled R$128.8 million, a R$151.9 million gain on financed
sales taxes which were forgiven by the government (tax incentives), and a
R$26.6 million gain associated with sales tax issues (PIS, COFINS, ICMS and
IPI). All other items accounted for R$14.8 million.

          These amounts were partially offset by goodwill amortization
(Antarctica, Cympay and Salus) of R$105.3 million and provisions for losses on
obsolete bottles and crates, which amounted to R$17.4 million for the period
ended December 31, 2002.

          NET FINANCIAL EXPENSES

          Our financial income consists not only of interest income, but also
of foreign exchange fluctuations and gains on derivatives, including foreign
currency swaps and forward contracts. Our financial expenses consist of
interest charges on debt, but also include Brazilian financial transaction
taxes and bank charges, interest on contingencies, and foreign exchange
fluctuations, principally on debt, and losses on derivatives, including cross
currency interest rate swaps and forward contracts.

          Financial income increased 606.0% for the year ended December 31,
2002 to R$2,530.3 million from R$358.4 million in 2001. Financial expenses
increased by 280.4% for the year ended December 31, 2002 to R$3,277.3 million
from R$861.5 million in the same period in 2001. Net financial expenses,
therefore, for the year ended December 31, 2002 were 48.5% above the prior
year period at R$747.1 million from R$503.1 million in the same period in
2001.


                                     101
<PAGE>


          OPERATING INCOME

          Operating income increased by 39.2% for the year ended December 31,
2002 to R$1,379.5 million from R$991.0 million in the same period in 2001.

          This increase was primarily the result of a 26.1% growth in gross
profit as a result of the revenue management initiatives on the key beer
brands, as well as our financial instruments strategy which mitigated the
impact of higher U.S. dollar-denominated costs in local currency due to the
devaluation of the real in 2002.

          NON-OPERATING INCOME (EXPENSE), NET

          Non-operating income (expense) amounted to an expense of R$72.1
million for the year ended December 31, 2002, compared to income of R$2.3
million for the same period in 2001. The principal items within non-operating
income (expense) in 2002 were a R$41.6 million impairment charge for losses on
assets held for sale and a R$30.5 million provisioned for all other items.

          INCOME TAX BENEFIT (EXPENSE)

          Taxes on income amounted to a benefit of R$280.6 million for the
year ended December 31, 2002, compared to a tax charge of R$51.9 million in
the same period in 2001. At statutory income tax rates, the charge for income
tax and social contribution would have amounted to R$444.5 million in 2002.
Non-taxable gains generated in subsidiaries abroad, that arose principally due
to foreign exchange gains on cash in U.S. dollars, amounted to a benefit of
R$735.2 mi llion in 2002, compared to R$151.5 million in 2001. All other items
accounted for a charge of R$10.1 million in 2002.

          PROFIT SHARING AND CONTRIBUTIONS

          Provision for employee and management profit sharing grew by 38.1%
for the year ended December 31, 2002 to R$112.3 million from R$81.3 million in
the prior year. This amount relates to performance based bonuses, which are
calculated based on the achievement of corporate, department or business unit,
and individual goals, established by the Board of Directors, including, among
others, certain Economic Value Added ("EVA") targets which were met in 2002.
According to AmBev's bylaws, the profit sharing payments are limited to 10%
of net income for employees and 5% for executives. During 2002, AmBev
contributed R$12.8 million to the FAHZ, to ensure that the Foundation's future
actuarial obligations were fully funded and expensed this amount directly to
income.

          MINORITY INTEREST

          Minority shareholders in our subsidiaries shared in losses of R$47.3
million for the year ended December 31, 2002, compared to losses of R$0.3
million in 2001. Higher losses were due principally to the economic crisis
which negatively affected the net income of our international beer operations.

          NET INCOME

          Net income grew 92.5% for the year ended December 31, 2002 to
R$1,510.3 million from R$784.6 million in the same period in 2001.


                                     102
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity have historically been cash flows from
operating activities and borrowings. Our material cash requirements have
included the following:

          o    the servicing of our indebtedness;

          o    capital expenditures;

          o    our share buyback program;

          o    payments of dividends and interest attributable to
               shareholders' equity;

          o    increases in ownership of our subsidiaries or companies in
               which we have equity investments; and

          o    investments in companies participating in the brewing, soft
               drink and malting industries.

          Our cash and cash equivalents and short-term investments at December
31, 2003, 2002 and 2001 were R$2,690.0 million, R$3,290.0 million and
R$2,562.9 million, respectively. The increase in the amount of our cash and
cash equivalents at the end of 2003 compared to the end of 2002 was primarily
a result of: (i) payment for the acquisition of our interest in Quinsa and
other acquisitions; (ii) payment of dividends during the year; and (iii)
capital expenditures. Proceeds from the issuance of CBB's US$500 million
10-year senior notes in September 2003 and liquidation of certain short-term
investments positively affected our cash position. The decrease in the amount
of our cash and cash equivalents at the end of 2002 compared to the end of
2001 was principally due to the repayment of debt in 2002 which was partially
offset by higher operating cash flows and the fact that our cash position at
the end of 2001 reflected the issuance of CBB's US$500 million notes in
December 2001.

          We believe that cash flows from operating activities, available cash
and cash equivalents and short-term investments, along with our derivative
instruments and our access to borrowing facilities, will be sufficient to fund
our capital expenditures, debt service and dividend payments going forward.


CASH FLOWS

          OPERATING ACTIVITIES

          Our cash flows from operating activities decreased 29.7% for the
year ended December 31, 2003 to R$2,527.6 million from R$3,595.0 million for
the year ended December 31, 2002. All the foregoing factors were partially
mitigated by other transactions generating a net cash inflow of R$8.3 million
in 2003.

          Our cash flows from operating activities totaled R$3,595.0 million
for the year ended at December 31, 2002 and R$1,006.6 million for the year
ended at December 31, 2001. Our cash generated in 2002 increased by 257.1%
when compared to 2001, as a consequence, primarily, of a 92.5% net income
growth in 2002, the latter being driven primarily by revenue management
initiatives and the use of commodity financial instruments which mitigate our
exposure to U.S. dollar-denominated costs.

                                     103
<PAGE>


          INVESTING ACTIVITIES

          Cash flows used in our investing activities for the year ended
December 31, 2003 totaled R$2,014.7 million compared to R$1,603.1 million for
the year ended December 31, 2002. The increased cash utilized in investing
activities in 2003 compared to 2002 primarily reflects the acquisition of our
economic interest in Quinsa and our investments in new markets in South and
Central America, such as Ecuador, Peru and Guatemala, as well as investments
in our direct distribution network, mainly through the acquisition of
third-party distributors.

         Cash flows used in our investing activities were R$1,603.1 million for
the year ended December 31, 2002 and R$1,687.4 million for the year ended
December 31, 2001.  The lower cash utilized in investing activities in 2002
compared to 2001 reflects the investment in Cympay, Polar, Pilcomayo and IBANN
in 2001, partially offset by the higher net investment in Astra in 2002 and
the receipt of proceeds of R$98.3 million from the disposal of assets
principally from the Antarctica subsidiaries.  In 2001, the disposal of assets
generated R$42.2 million.

          FINANCING ACTIVITIES

          Cash flows used in financing activities for the year ended December
31, 2003 totaled R$346.7 million, compared to R$2,912.2 million for the year
ended December 31, 2002. The proceeds of loans, primarily the U.S.$500 million
10-year Senior Notes issued in September 2003, as well as the cash generated
from our operating activities, were used to repay R$2,510.1 million in debt in
2003. Debt repayments in 2002 amounted to R$2,925.3 million and in 2001
amounted to R$1,343.9 million.

          Cash flows used in financing activities were R$2,912.2 million for
the year ended December 31, 2002, compared to proceeds of R$1,418.0 million in
2001. The proceeds of loans, plus cash generation, were used to repay
R$2,925.3 million of debt in 2002, including a significant amount of
short-term foreign currency-denominated trade finance debt. Repayments in 2001
amounted to R$1,343.9 million.

          As of December 31, 2003, our outstanding debt totaled R$5,980.4
million (of which R$1,976.1 million was short-term debt, including R$1,427.4
million of the current portion of long-term debt). Our debt consisted of
R$901.5 million of real-denominated debt and R$5,078.9 million of foreign
currency-denominated debt. The weighted average annual interest rate for the
short and long-term portions of the local currency-denominated debt at
December 31, 2003 was 12.1% and 6.8%, and the average duration was 5 months
and 2.3 years, respectively. The weighted average annual interest rate for the
short and long-term portions of the foreign currency-denominated debt was
approximately 7.0% and 10.5%, and the average duration was 6 months and 7.0
years, respectively.

          As of December 31, 2002, our outstanding consolidated debt totaled
R$4,486.7 million (of which R$607.4 million was short-term debt, including
R$292.5 million of the current portion of long-term debt). Our debt consisted
of R$988.1 million of real-denominated debt and R$3,498.6 million of foreign
currency-denominated debt. The weighted average annual interest rate for the
short and long-term portions of the local currency-denominated debt at
December 31, 2003 was 11.6% and 8.1%, and the average duration was 6 months
and 2.5 years, respectively. The weighted average annual interest rate for the
short- and long-term portions of the foreign currency-denominated debt was
approximately 9.9% and 9.7%, and the average duration was 5 months and 4.8
years, respectively.


                                     104
<PAGE>


          As of December 31, 2001, our outstanding debt totaled R$4,569.4
million (of which R$1,720.0 million was short term debt, including R$280.3
million of the current portion of long term debt). Our debt consisted of
R$1,042.0 million of real-denominated debt and R$3,527.4 million of foreign
currency-denominated debt. The weighted average annual interest rate for the
short and long-term portions of the local currency-denominated debt at
December 31, 2003 was 11.0% and 9.0%, and the average maturity was 6 months
and 2.6 years, respectively. The weighted average annual interest rate for the
short and long-term portions of the foreign currency-denominated debt was
approximately 5.6% and 10.3%, and the average maturity was 7 months and 6.5
years, respectively.

          The following tables set forth our net debt consolidated position as
of December 31, 2003, 2002 and 2001:

<TABLE>
<CAPTION>


                                                             NET DEBT CONSOLIDATED POSITION
                                                ----------------------------------------------------------
                                                            2003                           2002
                                                ----------------------------   ---------------------------
                                                LC(1)     FC(2)      TOTAL      LC(1)     FC(2)      TOTAL
                                              -------    -------    -------    ------   -------   --------
                                                                    (R$ in millions)
<S>                                             <C>      <C>        <C>        <C>      <C>        <C>
Short-term debt(3)..................            262.0    1,714.1    1,976.1    269.1      338.3      607.4
Long-term debt......................            639.5    3,364.8    4,004.3    719.0    3,160.3    3,879.3
TOTAL...............................            901.5    5,078.9    5,980.4    988.0    3,498.6    4,486.7

Cash and cash equivalents and
   short-term investments...........                                ----------                    --------
                                                                    2,690.0(4)                     3,290.0
Net debt............................                                3,290.4                        1,196.7

<FN>
Amounts may not add due to rounding.
(1)  LC = Local Currency
(2)  FC = Foreign Currency
(3)  Includes the current portion of long-term debt.
</FN>

</TABLE>


<TABLE>
<CAPTION>


                                                                  NET DEBT CONSOLIDATED POSITION
                                             --------------------------------------------------------------------------
                                                           2002                                    2001
                                             -----------------------------------     ----------------------------------
                                               LC(1)        FC(2)         TOTAL        LC(1)        FC(2)        TOTAL
                                             --------     --------      --------     --------      --------     --------
                                                                          (R$  in millions)
<S>                                             <C>        <C>           <C>            <C>            <C>           <C>
Short-term debt(3)..................            269.1        338.3         607.4        271.0       1,449.0      1,720.0
Long-term debt......................            718.9      3,160.3       3,879.3        771.0       2,078.4      2,849.4
Total...............................            988.0      3,498.7       4,486.7      1,042.0       3,527.4      4,569.4

Cash and cash equivalents and
   short-term investments...........                                    --------                                --------
                                                                         3,290.0                                 2,562.9
Net debt............................                                     1,196.7                                 2,006.4
<FN>
Amounts may not add due to rounding.
(1)  LC = Local Currency
(2)  FC = Foreign Currency
(3)  Includes the current portion of long-term debt.
</FN>
</TABLE>


          SHORT-TERM DEBT

          As of December 31, 2003 our short-term debt totaled R$1,976.1
million, consisting primarily of the current portion of our syndicated loan
denominated in Japanese Yen which matures in August 2004. As of December 31,
2003, 86.7% of our short-term debt was denominated in foreign currencies, with
an annual weighted average interest rate of approximately 7.0%. The Japanese
Yen-denominated loan represented 53.8% of our short-term debt.


                                     105
<PAGE>


          As of December 31, 2002 our short-term debt totaled R$607.4 million
and consisted primarily of financing for the importation of raw materials and
equipment, and working capital. As of December 31, 2002, 55.7% of our
short-term debt was denominated in foreign currencies, with an annual weighted
average interest rate of approximately 9.9%.

          LONG-TERM DEBT

          As of December 31, 2003, our long-term debt, excluding the current
portion of long-term debt, totaled R$4,004.3 million, of which R$639.5 million
was denominated in Reais. The remainder was denominated primarily in U.S.
dollars. The current portion of our local long-term debt totaled R$1,427.4
million as of December 31, 2003.

                                                                 LONG-TERM
                                                              DEBT MATURITY(1)

2005...........................................................     232.5
2006...........................................................     390.9
2007...........................................................     152.8
2008...........................................................     150.0
2009...........................................................      20.4
2010...........................................................      53.2
2011...........................................................   1,498.1
2012 and later.................................................   1,506.4
TOTAL..........................................................   4,004.3

Amounts may not add due to rounding.
(1) Excludes the current portion of long-term debt.


          In accordance with our foreign currency risk management policy, we
have entered into forward and cross-currency interest rate swap contracts in
order to mitigate currency and interest rate risks. See "Quantitative and
Qualitative Disclosures About Market Risk" for our policy with respect to
mitigating foreign currency and interest rate risks through the use of
financial instruments and derivatives.

          As of December 31, 2002, our long-term debt, excluding the current
portion of long-term debt, totaled R$3,879.3 million, of which R$718.9 million
was denominated in Reais. The remainder was denominated in U.S. dollars and
Japanese Yen. The current portion of our local long-term debt totaled R$292.5
million as of December 31, 2002.

          As of December 31, 2001, our long-term debt, excluding the current
portion of long-term debt, totaled R$2,849.4 million, of which R$771.0 million
was denominated in Reais. The remainder was denominated in Japanese Yen and
U.S. dollars. The current portion of our long-term debt totaled R$280.3
million as of December 31, 2001.

          Our cash interest paid was, R$ 256.2 million, R$559.5 million and
R$260.5 million for the years ended December 31, 2003, 2002, and 2001,
respectively.

          In August 2001, AmBev raised Japanese Yen 39,060 million through a
syndicated loan. The loan has a three-year maturity and an interest rate of
Yen LIBOR plus 2.37% per annum. We have contracted cross currency interest
rate swaps and forward contracts to mitigate the currency risk, swapping the
currency to U.S. dollars and fixing our interest rate at LIBOR plus 5.7% per
annum, varying over the term of the loan. This exposure was simultaneously
swapped to Reais at a floating rate of interest consistent with our treasury
policies. This loan is jointly guaranteed by AmBev and its subsidiaries and is
subject to indebtedness and liquidity ratios.


                                     106
<PAGE>


          In December 2001, CBB issued U.S.$500 million 10 1/2% Notes due
2011, fully guaranteed by AmBev. This offering significantly increased the
average maturity of our outstanding debt. On August 28, 2002, we completed an
SEC registered exchange offer. These notes contain certain covenants and
events of default which, if triggered, cause accelerated amortization. The
proceeds of the syndicated loans and the notes issued in 2001 were used
principally to repay short-term debt, but also to finance part of AmBev's
capital expenditure program and for general corporate purposes.

          In September 2003, CBB issued U.S.$500 million 8 3/4% Notes due
2013, fully guaranteed by AmBev. The transaction was priced at 99.674% of the
nominal principal amount with a coupon rate of 8.75%. These notes contain
certain covenants and events of default which, if triggered, cause accelerated
amortization. The proceeds of the notes issued in 2003 were used principally
to repay short-term debt, to finance part of AmBev's capital expenditure
program, and also for general corporate purposes. The original contracted
interest rate may be increased by 0.5%, if the notes are not registered with
the SEC by September 18, 2004.

          As of December 31, 2003, our local currency long-term debt
borrowings consisted primarily of long-term plant expansion and other loans
from governmental agencies including the Brazilian Economic and Social
Development Bank (BNDES), and BNDES programs, including the Fund for Financing
the Acquisition of Industrial Machinery and Equipment (FINAME), and the
Financing Fund for Studies and Projects (FINEP).

          Our reais denominated long-term borrowings at December 31, 2002
consisted primarily of long-term plant expansion and other loans from
governmental agencies including BNDES, and BNDES programs, including FINAME,
and FINEP. In May 2001 we entered into an additional line of credit agreement
with BNDES totaling R$216.5 million, of which R$168.2 million was received in
2001. The line of credit is payable in monthly installments with final
maturity in December 2008.

          On December 31, 2001, R$3,527.4 million of our total borrowings
(including the current portion of long term debt) were denominated in foreign
currencies. At the December 31, 2001 exchange rate, R$694.7 million
represented the Japanese Yen denominated syndicated loan, R$1,164.6 million
the U.S. dollar denominated 10 Year Senior Loan Notes, R$1,178.5 million
represented the U.S. dollar denominated raw material import financing, and the
remainder of R$489.6 million other U.S. dollar denominated debt.

          A substantial portion of the financings incurred by Quinsa's
subsidiaries in Argentina is denominated in U.S. dollars. The devaluation of
the Argentine Peso and the economic crisis in Argentina, mainly in 2002,
restricted the ability of these subsidiaries to generate sufficient cash flows
to meet the obligations falling due on the dates originally determined for
liabilities denominated in foreign currency. The management of Quinsa and its
subsidiaries renegotiated the maturity terms with financial institutions.

          At December 31, 2003, Quinsa was in default of certain loan
covenants. Quinsa's management has concluded the process of renegotiating the
terms of the affected loans. As of December 31, 2003, we reclassified
approximately US$4.2 million of Quinsa's long-term debt, with respect to which
Quinsa was not in compliance with certain covenants, to current liabilities.

          Quinsa's results of operations are proportionately consolidated in
our financial statements for 2003.


                                     107
<PAGE>


          SECURED DEBT

          Certain of our loans, with an aggregate outstanding principal
balance of R$620.5 million at December 31, 2003, are secured by either our
facilities located in, or equipment in our facilities located in, Agudos,
Jacarei, Aguas Claras (Sergipe), Nova Rio (Rio de Janeiro), Teresina, Manaus,
Aquiraz, Natal, Jacarepagua, Curitiba and Cuiaba. The loans, which include the
loans provided by BNDES and FINEP, were used to expand or modernize our
facilities and equipment.

          SALES TAX DEFERRALS AND OTHER TAX CREDITS

          We currently participate in several programs by which a portion of
payments of value-added tax on sales and services (ICMS) due from sales
generated by specific production facilities are deferred for periods of
generally five years from their original due date. The total amount deferred
at December 31, 2003, including ICMS financing, was R$768.7million, as
disclosed in note 11 to our financial statements. Percentages deferred
typically range from 40% to 100% over the life of the program. Balances
deferred generally accrue interest and are partially inflation indexed, with
adjustments generally set at 60% to 80% of a general price index. The amount
of sales taxes deferred as of December 31, 2003, R$393.6 million, included a
current portion of R$161.8 million (classified under other taxes and
contributions payable), and R$231.8 million payable thereafter. The remaining
R$375.1 million relates to ICMS financing. We also participate in ICMS
value-added tax credit programs offered by various Brazilian states which
provide tax credits to offset ICMS value-added tax payable. In return, we are
committed to meeting certain operational requirements including, depending on
the State, production volume and employment targets, among others. The grants
are received over the lives of the respective programs. In the years ended
December 31, 2003 and 2002 we recorded R$175.9 million and R$151.9 million,
respectively, of tax credits as gains on tax incentive programs. The benefits
granted are not subject to withdrawal in the event that we do not meet the
program's targets; however, future benefits may be withdrawn.

          COMMITMENTS AND CONTINGENCIES

The following table and discussion provide additional disclosure regarding our
material contractual obligations and commercial commitments as of December 31,
2003.

<TABLE>
<CAPTION>
                                                            LESS
                                                            THAN 1       1-3       3-5     MORE THAN
      CONTRACTUAL OBLIGATIONS                     TOTAL      YEAR       YEARS     YEARS     5 YEARS
---------------------------------------------- ---------- ---------- ---------- ---------- ----------
                                                        (in millions of Reais)
<S>                                            <C>         <C>        <C>        <C>        <C>
Long-term debt................................   5,431.7    1,427.6      623.4     302.8    3,077.9
Sales tax deferrals...........................     396.0      161.8      103.9     130.3          -
Capital expenditure commitments                    100.0      100.0
Aluminium procurements........................   3,300.0    1,100.0    2,200.0
Plastic procurements..........................     196.0       98.0       98.0
                                                ---------- ---------- ---------- ---------- ----------
  Total contractual cash commitments..........   9,423.7    2,887.4    3,025.3    433.10    3,077.9


The above table does not reflect contractual commitments discussed in "Off-
Balance Sheet Arrangements"
<FN>
(1)  Includes current portion. Detailed in note 10 to our audited financial
     statements.
(2)  The sales tax deferrals are detailed in note 11 to our financial
     statements. The total amount deferred of R$572.3 million considered in
     that note includes R$393.6 million of sales tax deferrals and R$375.1
     million of ICMS financing initiatives. The latter is included within the
     long-term debt balance in the table above, as they are financing in
     nature.
(3)  We have contracts with certain key suppliers to buy volumes of key
     materials in our production and packaging processes. We have a contract
     to purchase R$98.0 million per annum for the next three years of plastics
     for PETs. Further, we have contracts to buy other key materials,
     including aluminum and natural gas, but without fixed volumes or values.
     These amounts are currently unquantifiable, and have therefore not been
     included in the table above.
</FN>
</TABLE>

          Pursuant to the agreement with BAC relating to the Quinsa Class A
Shares, AmBev has a call option to acquire 373.5 million Quinsa Class A Shares
held by BAC in exchange for newly issued shares of AmBev, which may be
exercised by AmBev beginning in April 2009 and in April of each year
thereafter. Conversely, BAC has a put option to sell to AmBev the 373.5
million Quinsa Class A Shares


                                     108
<PAGE>


held by BAC in exchange for newly issued shares of AmBev, which may be
exercised by BAC beginning in April 2003 and in April of each year thereafter.
The put option held by BAC is immediately exercisable upon a change of control
of AmBev/occurring prior to January 31, 2006, and will be deemed exercised in
the event of a change of AmBev occurring after that date. Accordingly, BAC may
seek to exercise the put option in connection with the consummation of the
Interbrew-AmBev Transactions. See "Information on the Company--Acquisition of
Interest in Quinsa". The price of the shares will be calculated based on the
EBITDA of both AmBev and Quinsa at the time of exchange. Even though the put
and call options are not considered a commitment on our part, either we or BAC
may decide to exercise it in the future.

          We are subject to numerous commitments and contingencies with
respect to tax, labor, distributors and other claims. To the extent that we
believe these contingencies will probably be realized, they have been recorded
in the balance sheet. As discussed in "Operating and Financial Review and
Prospectus--Critical Accounting Policies--Contingencies--Unrecognized
exposures", these have been estimated at R$1,266.6 million but are not
considered commitments.

          CAPITAL INVESTMENT PROGRAM

          In 2003, capital expenditures on property, plant and equipment
totaled R$862.2 million. These expenditures primarily included investments in
quality, automation, modernization, replacement of packaging lines, and others
of approximately R$162.7 million; investment in warehousing for direct
distribution of R$405.9 million; investments in coolers of R$157.8 million;
expenditures for the replacement of bottles and crates of R$112.2 million; and
continued investments in information technology of R$23.6 million.

          At December 31, 2003, our investments in subsidiaries and
affiliates, including acquisitions of intangible assets net of cash, totaled
R$1,745.3 million. This amount included the acquisition of our economic
interest in Quinsa. The purchase price of our initial 40.475% economic
interest in Quinsa included a cash disbursement of R$1,429.0 million in 2003.
As of December 31, 2003, we had disbursed an additional R$249.6 million to
increase our economic interest in Quinsa to 49.66% through the purchase of an
additional 12.0 million Quinsa Class B shares on the open market. Also
included in the R$1,745.3 million are the acquisition of our interests in our
Peruvian and Ecuadorian assets.

          In 2002, capital expenditures on property, plant and equipment
totaled R$522.3 million. These expenditures included investments in quality,
automation, modernization, replacement of packaging lines, and others of
approximately R$192.8 million, investment in warehousing for direct
distribution of R$149.9 million, cooler investments of R$72.4 million,
expenditures for the replacement of bottles and crates of R$77.7 million and
continued investments in information technology of R$29.6 million. Investments
in subsidiaries and affiliates, including acquisition of intangible assets net
of cash, totaled R$75.6 million and included the purchase of an additional
stake in Astra.

          In 2001, capital expenditures in plant and equipment totaled R$446.8
million. These expenditures included investments in quality, automation,
modernization, replacement of packaging lines, and others of approximately
R$261.0 million, investment in warehousing for direct distribution of R$83.4
million, expenditures for the upgrade and replacement of bottles and crates of
R$66.5 million and continued investments in information technology of R$35.9
million. Investments in subsidiaries and affiliates, including acquisition of
intangible assets net of cash, totaled R$220.1 million and included the
purchase of 95.4% of the voting capital of Cympay and the increase of our
participation in Polar to 98.1% of the voting capital.

          We continually evaluate possible acquisitions, products and
technologies that are complementary to our business and any such acquisitions
or investments may be financed with additional debt. We announced our
investment in a facility in the Dominican Republic in February 2004. This
project will


                                     109
<PAGE>


involve the acquisition of 51% of the capital of Embodom that includes a soft
drink facility and distribution network, and construction of a beer facility
in Santo Domingo. This investment will involve approximately U.S.$33 million
of capital expenditures, working capital and launch expenses during 2004. We
expect operations to commence during 2004.

          AmBev is currently constructing a brewery in Peru. Certain equipment
is being transferred from facilities in Brazil to optimize underutilized
assets following the Brahma and Antarctica merger. Total expected investment
should amount to U.S.$30 million.

          We anticipate an increase in capital expenditures during 2004 as a
result of our focus on the construction of new facilities in South and
Central America, and increased investment in bottles and packaging in
connection with our expansion into new markets.

OFF-BALANCE SHEET ARRANGEMENTS

          We have a number of off-balance sheet items which have been
disclosed elsewhere in this annual report. They include the following:

          o    Future committed capital expenditures of R$100.0 million, which
               have been disclosed in "-Liquidity and Capital Resources
               -Commitments and contingencies";

          o    The FAHZ. As described in "-Critical Accounting Policies", for
               the purposes of Brazilian GAAP, we do not consolidate the
               assets and liabilities of the FAHZ, although we do so for U.S.
               GAAP purposes. While we record the benefit obligation for
               Brazilian GAAP, the remaining assets and liabilities are
               off-balance sheet for the purposes of Brazilian GAAP financial
               statements. See note 14 (c) of the financial statements for
               more information;

          o    We have a number of derivatives that we manage to mitigate our
               exposure to risk, as disclosed in "Quantitative and Qualitative
               Disclosures about Market Risk". The nominal value of open
               derivatives contracts (both assets and liabilities) at December
               31, 2003 is R$6,379.7 million;

          o    Packaging purchase contracts. We have included details of our
               contract commitments not currently held on balance sheet with
               regard to raw material purchase contracts in "-Commitments and
               Contingencies". This includes commitments to purchase R$196.0
               million of plastic and R$2,300.0 million of aluminum over the
               following three years;

          o    Contingencies which represent possible, though not probable,
               risk of loss have not been provided in our balance sheet and
               amount to R$1,266.6 million;

          o    We have contracts regarding our sales of the Bavaria brand to
               Molson, and the acquisition of our interest in Quinsa, which
               have potential future impacts. With regard to the former, we
               may receive further disposal proceeds, subject to certain brand
               market share criteria being met. See "Background on the
               Company--Brazilian Antitrust Approval". With regard to Quinsa,
               we may be obliged to acquire the remaining interest, subject to
               certain put and call options, which can be exercised by the
               shareholders of BAC or ourselves. See "Information on the
               Company--Joint Ventures and Strategic Alliances". These do not,
               however, represent guarantees, but will only be realized based
               on the occurrence of contingent events. AmBev's interest in
               Quinsa is accounted for on the proportional consolidation
               method under Brazilian GAAP and on the equity basis for
               purposes of U.S. GAAP.  Our put agreement is not reflected on our
               Brazilian GAAP balance sheet.

          We have no special purpose vehicles or other unconsolidated
interests in which we have material commitments, guarantees or contingencies.


                                     110
<PAGE>


Directors, Senior Management and Employees

                  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

          The Board of Directors and the executive officers oversee AmBev's
administration. The Board of Directors is comprised of three to 15 members who
must be shareholders of AmBev and provides the overall strategic direction of
AmBev. Directors are elected at general shareholders' meetings by holders of
common shares for a three-year term, reelection being permitted. Day-to-day
management is delegated to the executive officers of AmBev, who must number at
least two but no more than 15. The Board of Directors appoints executive
officers for a three-year term, reelection being permitted. The AmBev
shareholders' agreement regulates the election of directors of AmBev by the
controlling shareholders. See "Major Shareholders and Related Party
Transactions--AmBev Shareholders' Agreement--Management of AmBev".

DIRECTORS

          The following table sets forth information with respect to the
directors of AmBev:

<TABLE>
<CAPTION>

BOARD OF DIRECTORS(1)
                                                                                             DIRECTOR        TERM
NAME                                            AGE(2)  POSITION                              SINCE         EXPIRES
--------------------------------------------------------------------------------------------------------------------
<S>                                               <C>   <C>                                    <C>           <C>
Marcel Herrmann Telles.....................       54    Co-Chairman and Director               1999          2005
Victorio Carlos De Marchi..................       65    Co-Chairman and Director               1999          2005
Magim Rodriguez Junior.....................       62    Vice Chairman and Director             2004          2007
Jorge Paulo Lemann.........................       64    Director                               1999          2005
Carlos Alberto da Veiga Sicupira...........       56    Director                               1999          2005
Jose Heitor Attilio Gracioso...............       72    Director                               1999          2005
Roberto Herbster Gusmao....................       81    Director                               1999          2005
Vicente Falconi Campos.....................       63    Director                               1999          2005
Diego Fernando Miguens Bemberg.............       49    Director                               2003          2005

ALTERNATE MEMBERS

Roberto Moses Thompson Motta...............       46    Alternate Director                     1999          2005
Fersen Lamas Lambranho.....................       42    Alternate Director                     2002          2005

<FN>
(1)  Marcel Telles, Co-Chairman of the Board of Directors of AmBev, is also a member of the Board of Directors of Braco
     and ECAP, the former controlling shareholders of Brahma, while Victorio Carlos De Marchi, a Co-Chairman of the Board
     of Directors, was appointed by the FAHZ, the former controlling shareholder of Antarctica.  Braco and ECAP appointed
     two additional  directors--Jorge Paulo Lemann and Carlos Alberto Sicupira.  The FAHZ appointed two additional
     directors--Jose Heitor Attilio Gracioso and Roberto Herbster Gusmao.  Both alternate directors were appointed by Braco and
     ECAP, the former controlling shareholders of Brahma.  Diego Fernando Miguens Bemberg was appointed in  substitution of
     Jose de Maio Pereira da Silva by the members of the Board of Directors according to the terms of the Company's bylaws,
     referred by Quinsa.  Magim Rodriguez Junior, the former Chief Executive Officer of AmBev, was appointed Vice-Chairman of the
     Board of Directors by the members of the Board of Directors according to the terms of the Company's bylaws. The alternate
     members of the Board of  Directors of AmBev were  appointed  in order to replace,  if and when necessary, any of the
     directors appointed by Braco and ECAP.

(2)  Age as at May 31, 2004.
</FN>
</TABLE>

          The following are brief biographies of each of AmBev's directors:

          MARCEL HERRMANN TELLES. Mr. Telles is the Co-Chairman of the Board
of Directors of AmBev. Mr. Telles is a partner of GP Investimentos Ltda. He
served as Chief Executive Officer of Companhia Cervejaria Brahma from 1989 to
1999. Currently, he is also a member of the Board of Directors of Lojas
Americanas S.A. Mr. Telles has a degree in economics from Universidade Federal
do Rio de Janeiro and attended the Owners/Presidents Management Program at
Harvard Business School. His principal business address is Rua Dr. Renato Paes
de Barros 1017, 4th floor, Sao Paulo, Brazil.


                                     111
<PAGE>


          VICTORIO CARLOS DE MARCHI. Mr. De Marchi is the Co-Chairman of the
Board of Directors of AmBev and the Chairman of the Board of Directors of CBB.
Mr. De Marchi joined Companhia Antarctica Paulista in 1961 and held various
positions during his tenure, including Chief Executive Officer from 1998 to
April 2000. Mr. De Marchi was also president of the Brewing Industry National
Association ("Sindicerv") until February 2002 and is a member of the
Orientation Committee of FAHZ. Mr. De Marchi has a degree in economics from
Faculdade de Economia, Financas e Administracao de Sao Paulo and a law degree
from Faculdade de Direito de Sao Bernardo do Campo. His principal business
address is Rua Dr. Renato Paes de Barros 1017, 4th floor, Sao Paulo, Brazil.

          MAGIM RODRIGUEZ JUNIOR. Mr. Rodriguez is the Vice-Chairman of the
Board of Directors of AmBev. He served as Chief Executive Officer of AmBev
from 1999 to 2003. He is also Chief Executive Officer of CBB. He has been
associated with Brahma since 1989, serving first as Marketing Executive
Officer. He holds a degree in business administration and accounting from
Universidade Mackenzie. His principal business address is Rua Dr. Renato Paes
de Barros 1017, 4th floor, Sao Paulo, Brazil.

          JORGE PAULO LEMANN. Mr. Lemann is a member of the Board of Directors
of AmBev. Mr. Lemann is a partner of GP Investimentos Ltda. He is also a board
member of Lojas Americanas S.A., the Gillette Company and Swiss Re; Chairman
of the Latin American Advisory Committee of the New York Stock Exchange;
founder and board member of Fundacao Estudar, provider of scholarships for
students in Brazil; and member of the Advisory Board of DaimlerChrysler. He
previously served as a member of the Board of Directors of Brahma from 1990 to
1999. He holds an B.A. degree from Harvard Business School, class of 1961. His
principal business address is Av. Brig. Faria Lima, 3729, 7th floor, Sao
Paulo, Brazil.

          CARLOS ALBERTO DA VEIGA SICUPIRA. Mr. Sicupira is a member of the
Board of Directors of AmBev. He also served as a member of the Board of
Directors of Brahma from 1990 until 1999. Mr. Sicupira is a partner of GP
Investimentos Ltda. He is also currently a board member of Sao Carlos
Empreendimentos e Participacoes, ALL and Lojas Americanas S.A. He is also a
member of the Board of Associates of Harvard Business School since 1988. Mr.
Sicupira has a degree in business administration from the Universidade Federal
do Rio de Janeiro and a degree from the Harvard Business School. His principal
business address is Av. Brig. Faria Lima, 3729, 7th floor, Sao Paulo, Brazil.

          JOSE HEITOR ATTILIO GRACIOSO. Mr. Gracioso is a member of the Board
of Directors of AmBev. Mr. Gracioso joined Companhia Antarctica Paulista in
1946 and held various positions during his tenure. In 1994, Mr. Gracioso was
elected to Antarctica's Board of Directors and, in 1999, he was elected
Chairman of the Board of Directors of Antarctica, a position he held until
April 2000. He holds a degree in marketing from the Escola Superior de
Propaganda de Sao Paulo, a degree in business administration from Fundacao
Getulio Vargas and a degree in law from Faculdade de Direito de Sao Bernardo
do Campo. His principal business address is Av. Brig. Faria Lima, 3900, 11th
floor, Sao Paulo, Brazil.

          ROBERTO HERBSTER GUSMAO. Mr. Gusmao is a member of the Board of
Directors of AmBev. He was previously Vice-Chairman of the Board of Directors
of Companhia Antarctica Paulista from 1998 until April 2000. Mr. Gusmao was
Chief Executive Officer of Cervejaria Antarctica-Niger S.A. from 1968 to 1982,
and from 1986 to 1997. He was the Brazilian Minister of Trade and Industry
from 1985 to 1986 and CEO of Banco de Desenvolvimento do Estado de Sao Paulo
from 1982 to 1983. Mr. Gusmao was also a professor and founder of graduation
and post-graduation programs at Fundacao Getulio Vargas from 1954 to 1969. Mr.
Gusmao has a law degree from Faculdade de Direito da Universidade de Minas
Gerais. His principal business address is Av. Brig. Faria Lima, 3900, 11th
floor, Sao Paulo, Brazil.

          VICENTE FALCONI CAMPOS. Mr. Campos is a member of the Board of
Directors of AmBev. He serves as a member of the Institutional Council of
Fundacao de Desenvolvimento Gerencial (FDG) and is a member of the Board of
Directors of Sadia. Mr. Campos is also a consultant for the Brazilian
government and Brazilian and multinational companies such as Grupo Gerdau,
Grupo Votorantin and


                                     112
<PAGE>


Mercedes Benz. He holds a degree in Mining and Metal Engineering from
Universidade Federal de Minas Gerais, and M.Sc. and Ph.D. degrees from
Colorado School of Mines (USA). His principal business address is Av.
Contomo, 7962, 10th floor, Belo Horizonte, Brazil.

          DIEGO FERNANDO MIGUENS BEMBERG. Mr. Bemberg is a member of the board
of Directors of AmBev. He also serves as a member of the board of Directors of
BAC, Dinaluca S.A., Abrojo Alto S.A., Inversiones Delta S.A., Mojame S.A., MB
Holding S.A., Cadiluna S.A., Los Menucos S.A., Patagonia Gold S.A., Mineria
Puerto Madryn S.A., Minamalu S.A., MPV S.A. and Puerto Chico S.A. Mr. Bemberg
is an entrepreneur with principal business address at Av. del Libertador 498,
27th floor, Buenos Aires, Argentina.

          ROBERTO MOSES THOMPSON MOTTA. Mr. Motta is an alternate member of
the Board of Directors of AmBev. Mr. Motta is a partner of GP Investimentos
Ltda. He is also a board member of Submarino and, Lojas Americanas S.A.. He
worked in the investment banking division of Banco de Investimentos Garantia
S.A. from 1986 to 1992. He holds a degree in engineering from Pontificia
Universidade Catolica do Rio de Janeiro, and an M.B.A. from the Wharton School
of the University of Pennsylvania. His principal business address is Av. Brig.
Faria Lima, 3729, 7th floor, Sao Paulo, Brazil.

          FERSEN LAMAS LAMBRANHO. Mr. Lambranho is an alternate member of the
Board of Directors of AmBev. Mr. Lambranho is a partner at GP Investimentos
Ltda. and has been a Board Member of Lojas Americanas since 1998, of Telemar
since 1999 and of Sao Carlos Empreendimentos e Participacoes since 1999. Prior
to joining GP Investimentos, Mr. Lambranho was CEO of Lojas Americanas. Mr.
Lambranho has a B.S. in Engineering from Universidade Federal do Rio de
Janeiro, an M.S. in Business Administration from Universidade Federal do Rio
de Janeiro (COPPEAD) and an O.P.M. (Owners/Presidents Management Program) from
Harvard Business School. His principal business address is Av. Brigadeiro
Faria Lima 3729, 7th floor, Sao Paulo, Brazil.


                                     113
<PAGE>


          EXECUTIVE OFFICERS

          The following table sets forth information with respect to the
executive officers of AmBev:

<TABLE>
<CAPTION>

                                                                                     CURRENT
                                                                                     POSITION      TERM
NAME                                      AGE(1)  TITLE                              HELD SINCE    EXPIRES
----------                                ------  -------------------------------    ----------    --------
<S>                                       <C>     <C>                                    <C>          <C>
Carlos Alves de Brito(2)................    44    Chief Executive Officer                2004         2005
Juan Manuel Vergara Galvis(3)...........    44    International Executive Officer        2004         2005
Luis Felipe Pedreira Dutra Leite........    38    Chief Financial Officer and            2000         2006
                                                  Investor Relations Officer
Jose Adilson Miguel.....................    62    Retail Executive Officer               2000         2006
Claudio Braz Ferro......................    49    Industrial Executive Officer           2000         2006
Miguel Nuno da Mata Patricio............    38    Marketing Executive Officer            2000         2006
Pedro de Abreu Mariani..................    37    General Counsel                        2004         2005
Luiz Fernando Zielger de Saint Edmond       38    Sales Executive Officer                2004         2005

<FN>
(1)  Age at May 31, 2004.
(2)  Mr. Brito has been an Executive Officer since 2000; however, he was appointed CEO in 2004.
(3)  Mr. Vergara has been an Executive officer since 2000; however, he was appointed International
     Executive Officer in 2004.
</FN>
</TABLE>

          The following are brief biographies of each of AmBev's executive
officers.

          CARLOS ALVES DE BRITO. Mr. Brito is the Chief Executive Officer of
AmBev and Chief Operating Officer of CBB. He served as Chief Operating Officer
of AmBev from 2000 to 2003. He joined Brahma in 1989 and has held various
management positions during his tenure. Mr. Brito holds a degree in mechanical
engineering from the Federal University of Rio de Janeiro and an M.B.A. from
Stanford University. His principal business address is Rua Dr. Renato Paes de
Barros 1017, 4th floor, Sao Paulo, Brazil.

          JUAN MANUEL VERGARA GALVIS. Mr. Vergara is the International
Executive Officer of AmBev. He served as the Executive Soft Drink and
Non-alcoholic Non-Carbonated Beverages Officer of AmBev from 2001 to 2003.
Prior to this appointment he was the Marketing Executive Officer of Brahma and
AmBev from 1997 to 2000. He holds a degree in business administration from the
Colegio de Estudos Superiores de Administracion, in Bogota, Colombia. His
principal business address is Rua Dr. Renato Paes de Barros 1017, 4th floor,
Sao Paulo, Brazil.

          LUIS FELIPE PEDREIRA DUTRA LEITE. Mr. Dutra is the Chief Financial
Officer and Investor Relations Officer of AmBev and the Chief Financial
Officer of CBB. He joined Brahma in 1990 and has held numerous positions
during his tenure. Mr. Dutra holds a degree in economics and an M.B.A. in
financial management from Universidade de Sao Paulo. His principal business
address is Rua Dr. Renato Paes de Barros 1017, 4th floor, Sao Paulo, Brazil.

          JOSE ADILSON MIGUEL. Mr. Miguel is the Retail Executive Officer of
AmBev. He has held various management positions during his tenure with Brahma
since 1962. He was appointed Commercial Manager in 1970, General Marketing
Manager in 1976, and Marketing Executive Officer in 1980. His principal
business address is Rua Dr. Renato Paes de Barros 1017, 4th floor, Sao Paulo,
Brazil.

          CLAUDIO BRAZ FERRO. Mr. Ferro is the Industrial Executive Officer of
AmBev and CBB. He joined Brahma in 1977 as a Brew Master and was responsible
for the production and bottling divisions. In 1984, he was appointed Manager
of the Industrial Department and in 1990, Manager of the Rio de Janeiro plant.
He holds a degree in industrial chemistry from Universidade Federal de Santa
Maria. His principal business address is Rua Dr. Renato Paes de Barros 1017,
4th floor, Sao Paulo, Brazil.


                                     114
<PAGE>


          MIGUEL NUNO DA MATA PATRICIO. Mr. Patricio is the Executive Officer
of Marketing of AmBev. He joined the company in 1999. Mr. Patricio has a
degree in business administration from Fundacao Getulio Vargas in Sao Paulo.
His principal business address is Rua Dr. Renato Paes de Barros 1017, 4th
floor, Sao Paulo, Brazil.

          PEDRO DE ABREU MARIANI. Mr. Mariani is the General Counsel of AmBev.
He joined the Company in 2004. He holds a law degree from Pontificia
Universidade Catolica do Rio de Janeiro and a L.L.M. from the London School of
Economics and Political Science. His principal business address is Rua Dr.
Renato Paes de Barros, 1017, 4th floor, Sao Paulo, Brazil.

          LUIZ FERNANDO EDMOND. Mr. Edmond is the Sales Executive Officer of
AmBev. He joined the Company in 1990 in the first group of trainees and held
various positions in the Distribution, Commercial, and Direct Distribution
Departments. Mr. Edmond has an engineering degree from Universidade Federal do
Rio de Janeiro. His principal business address is Rua Dr. Renato Paes de
Barros, 1017, 4th floor, Sao Paulo, Brazil.

BOARD PRACTICES AND CORPORATE GOVERNANCE

          In 2003, we held numerous meetings with investors and analysts. We
also participated in conferences and road shows in Brazil, the United States
and Europe. Additionally, our Investor Relations website is constantly
updated, providing the market with information which is virtually real-time.

          We host quarterly conference calls, transmitted simultaneously on
the Internet, to clarify financial and operating results as well as answer
questions from the investment community. In March 2003, we organized our first
site visit for investors and analysts.

          FISCAL COMMITTEE

          At AmBev's Annual and Extraordinary Shareholders' Meeting held on
April 28, 2004, the re-appointment of a Fiscal Committee was approved by
present shareholders for the fiscal year 2004. The members of the Fiscal
Committee will remain in office until the next annual shareholder's meeting
which will deliberate on the financial statements of the fiscal year ended
December 31, 2004. Although AmBev's Fiscal Committee is not permanent,
shareholders have been approving the re-appointment of Fiscal Committees for
each fiscal year since AmBev's first Annual Shareholders' Meeting in 2000,
which occured promptly after CADE approved the combinatin of Antartica and
Brahma to form AmBev. Both Brahma and Antarctica had fiscal committees similar
to AmBev's.

          The responsibilities of the Fiscal Committee include supervision of
management performing analyses and rendering opinions regarding AmBev's
financial statements and performing other duties in accordance with Brazilian
Corporate Law. Current members of the committee are Messrs.
Antonio Luiz Benevides Xavier, Everardo de Almeida Maciel and Jose Fiorita,
and their alternate members are Messrs. Luiz de Santa Ritta Matta, Ricardo
Scalzo and Jose Botafogo Goncalves, respectively. None of the members of the
Fiscal Committee is also a member of the Board of Directors or of the
Executive Committee.

          THE BOARD OF DIRECTORS

          Except for Mr. Magim Rodriguez Junior, recently appointed Vice
Chairman of the Board of Directors; Mr. Diego Meguens, who was appointed
member of the Board of Directors in 2003 as a result of the acquisition of our
interest in Quinsa; and Mr. Fersen Lambranho, who was appointed an alternate
member of the Board of Directors in 2002, all of the current members and
alternate members of the Board of Directors of AmBev have been members since
1999 and had their mandates renewed in 2002 until 2005.


                                     115
<PAGE>


          The Board members use their extensive knowledge of the business to
ensure that AmBev reaches its long-term goals and maintains their short-term
competitiveness. Also, the Board of Directors ensures that AmBev pursues its
short-term business goals without compromising the Company's long-term growth,
while ensuring that AmBev's corporate values are practiced and known.

          The Company's Chairman of the Board of Directors and the Chief
Executive Officer are separate positions held by different people. The Board
of Directors is supported in its decision-making by the following committees:

          EXECUTIVE COMMITTEE

          The Executive Committee is the main link between the policies and
decisions made by the Board of Directors and AmBev's management team. The
Executive Committee's explicit responsibilities are:

          o    to present medium-term planning proposals to the Board of
               Directors;

          o    to propose AmBev's annual performance targets and the budgets
               needed to attain the projected goals; and

          o    to monitor AmBev's standing through analysis of its results and
               market developments.

          The Committee is also responsible for the interests of AmBev's
employees, and its members are involved in recruiting programs, variable
compensation policies and in the spreading of our culture.

          Current members of the committee are Messrs. Marcel Herrmann Telles,
Victorio Carlos De Marchi and Magim Rodriguez Junior.

          Throughout the year, the Executive Committee holds seven meetings,
during which it addresses, among other matters: actual results versus
performance targets; the market; integrated planning; goals; budget;
personnel; investment plans; remuneration policy; and pricing policy.

          AUDIT COMMITTEE

          The Audit Committee, created in 2001, acts on behalf of the Board of
Directors and is responsible for the integrity and accuracy of our
consolidated financial statements and the performance of internal and external
auditors. It also oversees the legal compliance of our operations, the
management of internal controls and the appointment of the external auditors.

          Current members of the committee are Messrs. Victorio Carlos De
Marchi, Jose Heitor Attilio Gracioso and Jorge Paulo Lemann.

          Throughout the year, the Audit Committee holds four meetings, in
which are discussed, among other matters: AmBev's financial statements;
internal audits; tax risks; and compliance with the Sarbanes-Oxley Act.

          FINANCE COMMITTEE

          The Finance Committee analyzes and monitors our annual investment
plan and ensures that it is carried out. This Committee assesses merger and
acquisition opportunities before forwarding them to the Board of Directors. It
is also the Finance Committee's responsibility to evaluate the best capital
structure AmBev to maximize EVA.


                                     116
<PAGE>


          Current members of the committee are Messrs. Marcel Herrmann Telles,
Carlos Alberto da Veiga Sicupira, Roberto Moses Thompson Motta and Luis Felipe
Pedreira Dutra Leite.

          Throughout the year, the Finance Committee holds three meetings, in
which are discussed, among other matters: budget; financial risk analysis;
treasury policy; and merger and acquisition opportunities.


          CONSULTING COMMITTEE

          The Shareholders General Meeting held on April 25, 2003, included a
provision in the Company's Bylaws authorizing the Board of Directors to create
a Consulting Committee, formed by three independent members appointed by the
Board of Directors for terms of three years or in case of vacancy. The
Consulting Committee shall have the following functions:

          o    to issue opinions to: the Shareholders General Meetings
               concerning the conducting of the business and compliance with
               statutory obligations by the Company's senior management; the
               Company's management discussion and analysis report; and any
               submissions to be made by the Board of Directors to the
               Shareholders General Meetings;

          o    to provide economic, industry and commercial data to the
               Board of Directors related to the Company's main business
               purposes, including opinions and recommendations;

          o    to make recommendations concerning new business and general
               issues submitted to their consultation.

          The current members of the Consulting Committee appointed by the
Board of Directors on June 11, 2003, with a term expiring in 2006, are:
Messrs. Jose de Maio Pereira da Silva, Paulo Cezar Castello Branco Chaves de
Aragao and Ary Oswaldo Mattos Filho.

COMPENSATION

          The aggregate remuneration of all members of the Board of Directors
and senior management of AmBev in 2003 for services in all capacities amounted
to R$5.9 million, including variable pay (bonuses). The members of the Board
of Directors and senior management received some additional benefits provided
to all AmBev employees and their beneficiaries and covered dependents, such as
medical assistance, educational expenses and supplementary social security
benefits. All such benefits were provided through the FAHZ and, prior to this
the Brahma Welfare Foundation. The Board of Directors and AmBev's senior
management also receive benefits pursuant to AmBev's pension, profit sharing
plan, and share purchase plan. For a description of these plans see "--Plans".

          There are no benefits in kind provided to the directors of the
Company. Neither are there agreements between AmBev and any of its directors
providing for benefits upon termination of employment.


                                     117
<PAGE>


EMPLOYEES

          As of December 31, 2003, AmBev and its subsidiaries had
approximately 18,890 employees, approximately 52% of whom were engaged in
production, 41% of whom were engaged in sales and distribution and 7% of whom
were engaged in administration.

          The following table sets forth the number of employees of AmBev and
its subsidiaries as of the end of the years indicated:


                         EMPLOYEES AS OF DECEMBER 31,
    --------------------------------------------------------------------
          2003                       2002                       2001
    ---------------            ----------------            -------------

         18,890                     18,570                     18,136


          The following table shows the geographical distribution of AmBev's
employees as of December 31, 2003:

                  GEOGRAPHICAL DISTRIBUTION OF AMBEV EMPLOYEES
   --------------------------------------------------------------------------
   LOCATION                                               NUMBER OF EMPLOYEES
   ------------------------------------------             -------------------

   Brazil....................................                    16,384
   Venezuela.................................                     1,168
   Peru......................................                       826
   Guatemala.................................                       199
   Uruguay...................................                       188
   Argentina.................................                       125
                                                          -------------------
                                                                 18,890
                                                          ===================


          TRAINING.

          In 1995, Brahma created the "Brahma University" (now "AmBev
University") to train and enhance our employees' performance, and the
performance of our distributors' employees. In 2003, the AmBev University
provided specific training for 1,579 employees and its distributors, totaling
6,788 hours of training. At the management level, AmBev's senior management
and executive officers participate in several business and technical training
programs at leading United States and European universities. Training schools
in our major facilities provide courses, mainly technical in nature, for
supervisory and operating personnel. Together with the Brazilian beer
producers' association, Sindicerv, AmBev also has established a training
school at Vassouras, near Rio de Janeiro, which includes a micro brewery,
bottling line and malting plant. AmBev also maintains a partnership with
SIEBEL Institute in Chicago and with Domens Academie in Munich, Germany, where
its personnel responsible for beer production are introduced to new worldwide
technologies and is able to visit other brewers and equipment suppliers.

          AmBev also operates the AmBev University TV. The University is a
proprietary distance-learning tool operated over a secure satellite
broadcasting system that connects all of AmBev's business units and a majority
of our third-party distributors. In 2003, we provided standardized effective
training to nearly 12,500 sales people. The television program coursework is
reinforced and supplemented with online testing to closely monitor the
learning process of each sales person, allowing us to pinpoint weaknesses and
then act to provide individual training programs, as well as providing
feedback to improve the quality of the broadcast. AmBev believes that its
personnel are well trained and kept abreast of current technical and business
developments.


                                     118
<PAGE>


          INDUSTRIAL RELATIONS.

          All of AmBev's employees are represented by labor unions, but only
7.5% of our employees in Brazil are actually members of labor unions. The
number of administrative and distribution employees who are members of labor
unions is not significant. Salary negotiations are conducted annually between
the workers' unions and AmBev. Collective bargaining agreements are negotiated
separately for each facility or distribution center. AmBev's collective
bargaining agreements have a term of one year, and AmBev usually enters into
new collective bargaining agreements on or prior to the expiration of the
existing agreements. AmBev believes that its relation with its employees is
satisfactory, and there have been no strikes or significant labor disputes in
the past nine years.

          HEALTH AND SEVERANCE BENEFITS.

          In addition to wages, AmBev's employees receive additional benefits
from AmBev. Some of these benefits are mandatory under Brazilian law, some are
provided for in collective bargaining agreements, and others are voluntarily
given by AmBev. The benefits packages of AmBev's employees consist of benefits
provided both by AmBev directly and by AmBev through the FAHZ, which provides
medical, dental, educational and social assistance to current and retired
employees of AmBev and their beneficiaries and covered dependents, either for
free or at a reduced cost. AmBev may voluntarily contribute up to 10% of its
consolidated net income, as determined in accordance with Brazilian Corporate
law and AmBev's bylaws, to support the FAHZ. As part of the process of
merging the Brahma Welfare and FAHZ (see "Major Shareholders and Related Party
Transactions--Major Shareholders--Share Ownership History of AmBev's Major
Shareholders"), an actuarial evaluation was carried out to determine the level
of contributions required to be made to the FAHZ to provide benefits to all
employees compatible with those formerly provided by the Brahma Welfare
Foundation.

          AmBev is required to contribute 8.5% of each employee's gross pay to
an account maintained in the employee's name in the Government Severance
Indemnity Fund (FGTS). Under Brazilian law, AmBev is also required to pay
termination benefits to employees dismissed without just cause, equal to 50%
of the accumulated contributions made by AmBev to the FGTS during the
employee's period of service. For CBB, we have a preliminary injunction
("liminar") that allows the company to contribute 8% and 40% respectively.

          STOCK OWNERSHIP PLAN.

          AmBev has a stock ownership plan designed to attract and retain the
services of qualified directors, executives and employees. Both common and
preferred shares may be granted in the plan. As of December 31, 2003 the plan
had outstanding and exercisable rights to acquire 733,689,000 shares of AmBev.
The plan is administered by a committee, which includes non-management members
of the Board of Directors of AmBev. This committee periodically creates
programs under the stock ownership plan, defining the terms and employees to
be included, and establishes the price at which the rights to acquire shares
are to be issued. This price may not be less than 90% of the average price of
the shares traded on the stock market on the previous three business days,
adjusted by an inflation index to be defined by the committee for each
program. The number of shares which may be granted in each year cannot exceed
5% of the total number of shares outstanding of each type of shares, although
the amount has always remained significantly below this level. When shares are
acquired by the employee, AmBev issues new shares or transfers treasury shares
to the option holder. Stock ownership rights granted have no final date to be
exercised. When the grantee leaves the company (other than upon retirement),
the rights to acquire shares are forfeited. If an employee decides to sell
shares acquired under the plan or an employee leaves the company, AmBev has
the right to buy such shares at a price equal to:

          o    the inflation indexed price paid by such employee, if the
               employee sells the shares during the first 30 months after
               shares are acquired by the employee;


                                     119
<PAGE>


          o    50% of the inflation indexed price paid, plus 50% of the
               prevailing market price, if the employee sells the shares after
               the first 30 months but before the 60th month after shares are
               acquired by the employee; or

          o    the market price, if the employee sells the shares more than 60
               months after shares are acquired by the employee.

          For plans granted prior to 2003, the subscription price of the
shares could be paid over time, such period normally not exceeding four years
and at an interest rate of 8% per annum over a designated general price index.
These loans are guaranteed by the shares which will be acquired under the
plan. In order to comply with the Sarbanes-Oxley Act of 2002, we are currently
revising the terms of our stock ownership plan to extend the financing for the
purchase of shares upon exercise of the right to acquire such shares
exclusively to our employees and not to officers or directors. At December 31,
2003 the outstanding balance of the subscription price yet to be paid amounted
to R$234.7 million and is classified as an asset under Brazilian GAAP and a
deduction from shareholders' equity under U.S. GAAP.

          AMBEV PENSION PLAN.

          AmBev's pension plans are administered by the AmBev Pension Fund
(Instituto AmBev de Previdencia Privada - "IAPP") which is the successor of
the Brahma Pension Fund - Instituto Brahma de Seguridade Social - as from
December 8, 2000.

          The AmBev Pension Fund operates both a defined benefit pension plan
and a defined contribution plan, which supplements benefits that the Brazilian
government social security system provides to our employees. The AmBev Pension
Fund was established solely for the benefit of our employees and its assets
are held independently. We nominate the three directors of the AmBev Pension
Fund. As of December 31, 2003, we had 4,662 participants in our plan of which
2,778 participated in the defined benefit plan and 1,884 in the defined
contribution plan.

          The AmBev Pension Fund is available to both active and retired
employees. Three months after joining us, employees may opt to join the
defined contribution plan. Upon leaving (unless upon retirement) members are
required to leave the AmBev Pension Fund. Members who joined after 1990 and
request to leave will receive their contributions in a single inflation
indexed installment.

          Prior to May 1998, when the defined contribution plan was launched,
there was only a defined benefit plan. The defined benefit plan was closed to
new participants as of this date. New employees of AmBev can only join the
defined contribution plan. At the time of adoption of the defined contribution
plan, active participants were given the option either to remain in the old
plan, or transfer their accumulated benefits to the defined contribution plan.
The defined contribution plan covers substantially all new employees.

          Pension costs relating to the AmBev contributed to IAPP for the year
ended December 31, 2003, were approximately R$ 4.4 million compared to R$ 4.2
million in 2002.

          The plan assets are comprised principally of time deposits and
equity securities (including 9,595,170 preferred shares and 88,664,850 common
shares of AmBev at December 31, 2003 with a total market value of R$63.4
million as of December 31, 2003), government securities and properties. All
benefits are calculated and paid in inflation indexed reais.


                                     120
<PAGE>


          PROFIT-SHARING PLAN.

          AmBev's bylaws provide for the distribution of up to 10% of AmBev's
net income, as determined in accordance with Brazilian GAAP, to its employees.
Executive officers are eligible for profit sharing in an amount not to exceed
the lower of their annual remuneration or 5% of AmBev's net income in the
aggregate.

          Payments under AmBev's profit sharing plan are subject to the
availability of cash resources of AmBev. Executive officers' bonuses are
determined based upon the achievement of corporate, department or
business-unit and individual goals, established by the Board of Directors. All
other employees of AmBev are entitled to performance based variable bonuses
calculated on an annual basis.

          Among all employees, up to 70% working at our headquarters and up to
60% of production, sales and distribution employees, can be awarded bonuses.
The distribution of these bonuses is subject to a three-tier system in which
AmBev must first achieve efficiency targets approved by the Board of
Directors. Following that, each business unit must achieve its targets and
finally individual performance is ranked. Beginning in April 2003, AmBev
changed the rules for individual bonuses of the sales supervisors. Their
results are ranked each quarter and bonuses are paid twice a year, in August
and in February.

          Our annual targets may be changed by the Board of Directors. For
employees involved in operations, we have a collective award for production
sites and distribution centers with outstanding performances. The bonus award
at the plant level is based on a ranking between the different plants, which
based on their relative ranking may or may not receive the bonus.

          Expenses of AmBev provisioned under these programs amounted to
R$23.7 millions for the year ended December 31, 2003, R$112.3 million for the
year ended December 31, 2002 and R$81,3 million for the year ended December
31, 2001.

          Bonuses, commissions and collective awards to be shared among
employees depend on the financial results of AmBev and up to 25% of AmBev's
annual EVA (Economic Value Added) may be distributed, depending on the target
real EBITDA growth. According to AmBev's annual real EBITDA growth, the total
amount shared among employees, as a percentage of AmBev's annual EVA, is as
follows:

          o    EBITDA growth < 15% = 0

          o    EBITDA growth from 15% up to 19.99% = 15% EVA

          o    EBITDA growth from 20% up to 20.99% = 20% EVA

          o    EBITDA growth form 21% up to 21.99% = 21% EVA

          o    EBITDA growth from 22% up to 22.99% = 22% EVA

          o    EBITDA growth from 23% up to 23.99% = 23% EVA

          o    EBITDA growth from 24% up to 24.99% = 24% EVA

          o    EBITDA growth > 25% = 25% EVA


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<PAGE>


DIRECTOR AND SENIOR MANAGEMENT SHARE OWNERSHIP

          The following table shows the amount, type and percentage of class
of our equity securities held by members of our Board of Directors and by
senior management as of May 31, 2004:

<TABLE>
<CAPTION>


                                                        AMOUNT AND PERCENTAGE      AMOUNT AND PERCENTAGE
NAME                                                      OF COMMON SHARES          OF PREFERRED SHARES
-------------------------------------------------        ---------------------      ---------------------
<S>                                                       <C>                        <C>
Marcel Herrmann Telles(1)........................          *                          *
Victorio Carlos De Marchi(2).....................          *                          *
Magim Rodriguez Junior...........................          *                          *
Jorge Paulo Lemann(3)............................          *                          *
Carlos Alberto da Veiga Sicurpira(4) ............          *                          *
Jose Heitor Attilio Gracioso(5)..................          *                          *
Roberto Herbster Gusmao(6).......................          *                          *
Vicente Falconi Campos...........................          *                          *
Diego Fernando Miguens Bemberg...................          *                          *
Roberto Moses Thompson Motta(7)..................          *                          *
Fersen Lamas Lambranho...........................          *                          *
Carlos Alves de Brito............................          *                          *
Juan Manual Vergara Galvis.......................          *                          *
Luis Felipe Pedreira Dutra Leite.................          *                          *
Jose Adilson Miguel(8)...........................          *                          *
Claudio Braz Ferro...............................          *                          *
Miguel Nuno da Mata Patricio.....................          *                          *
Luiz Fernando Zielger de Saint Edmond............          *                          *

<FN>
*    Indicates that the individual holds less than 1% of the class of securities.

(1)  Does not include 4,214,345,035 common shares owned by Braco Investimentos
     S.A. and 4,039,568,225 common shares owned by ECAP. Mr. Telles owns
     indirectly 18.82% of the voting capital of Braco Investimentos S.A.,
     which, in turn, owns 99.74% of the voting shares of ECAP, and is also an
     intervening party to the AmBev shareholders' agreement. See "Major
     Shareholders and Related Party Transactions-- Major Shareholders--AmBev
     Shareholders' Agreement". Mr. Telles is also a trustee of the FAHZ. For
     information regarding the shareholdings of the FAHZ, see "Major
     Shareholders and Related Party Transactions--AmBev's Major Shareholders".

(2)  Mr. De Marchi is a trustee of the FAHZ. For information regarding the
     shareholding of the FAHZ, see "Major Shareholders and Related Party
     Transactions--AmBev's Major Shareholders".

(3)  Does not include 4,214,345,035 common shares owned by Braco Investimentos
     S.A. and 4,039,568,225 common shares owned by ECAP.
     Mr. Lemann owns indirectly 42.12% of the voting capital of Braco Invest.
     S.A., which, in turn, owns 99.74% of the voting shares of ECAP, and is
     also an intervening party to the AmBev shareholders' agreement. See
     "Major Shareholders and Related Party Transactions--Major
     Shareholders--AmBev Shareholders' Agreement".

(4)  Does not include 4,214,345,035 common shares owned by Braco Investimentos
     S.A. and 4,039,568,225 common shares owned by ECAP. Mr. Sicupira owns
     indirectly 15.17% of the voting capital of Braco Investimentos S.A.,
     which, in turn, owns 99.74% of the voting shares of ECAP, and is also an
     intervening party to the AmBev shareholders' agreement. See "Major
     Shareholders and Related Party Transactions--Major Shareholders--AmBev
     Shareholders' Agreement".

(5)  Mr. Gracioso is a trustee of the FAHZ. For information regarding the
     shareholding of the FAHZ, see "Major Shareholders and Related Party
     Transactions--AmBev's Major Shareholders".

(6)  Mr. Gusmao is a trustee of the FAHZ. For information regarding the
     shareholding of the FAHZ, see "Major Shareholders and Related Party
     Transactions--AmBev's Major Shareholders".

(7)  Does not include 4,214,345,035 common shares owned by Braco Investimentos
     S.A. and 4,039,568,225 common shares owned by ECAP. Mr. Motta is an
     executive officer of Braco Investimentos S.A. and ECAP.

(8)  Mr. Miguel is a trustee of the FAHZ. For information regarding the
     shareholding of the FAHZ, see "Major Shareholders and Related Party
     Transactions--AmBev's Major Shareholders".
</FN>
</TABLE>


                                     122
<PAGE>




DIFFERENCES BETWEEN THE UNITED STATES AND THE BRAZILIAN CORPORATE GOVERNANCE
PRACTICES

          The SEC approved in November 2003 the new corporate governance rules
established by the NYSE. According to these rules, foreign private issuers
that are listed on the NYSE must disclose the significant ways in which their
corporate governance practices differ from the corporate governance standards
established by the NYSE.

          In Brazil, the CVM has provided guidance to the market with a set of
recommendations on differentiated corporate governance practices which are not
yet required but strongly recommended. Additionally, the Sao Paulo Stock
Exchange (BOVESPA) and the Brazilian Institute of Corporate Governance (IBGC)
have developed guidelines to help with the dissemination of corporate
governance practices.

          The principal differences between the NYSE corporate governance
standards and our corporate governance practices are as follows:

          INDEPENDENCE OF DIRECTORS AND INDEPENDENCE TESTS

          NYSE corporate governance standards require listed companies to have
a majority of independent directors and set forth the principles by which a
listed company can determine whether a director is independent. "Controlled
companies" such as AmBev need not comply with this requirement.

          The Brazilian corporate law and our bylaws require that our
directors be elected by our shareholders at a general shareholders meeting.
Currently, all of our directors are appointed by our controlling shareholders;
minority shareholders are represented through one seat in our Fiscal
Committee.

          Brazilian corporate law and the CVM establish rules in relation to
certain qualification requirements and restrictions, investiture,
compensation, duties and responsibilities of a company's executives and
directors.

          EXECUTIVE SESSIONS

          NYSE corporate governance standards require non-management directors
of a listed company to meet at regularly scheduled executive sessions without
management.

          According to the Brazilian corporate law, up to one third of the
members of the board of directors can also hold management positions. However,
none of our directors holds a management position at this time and,
accordingly, we believe we would be in compliance with this NYSE corporate
governance standard.

          NOMINATING/CORPORATE GOVERNANCE AND COMPENSATION COMMITTEES

          NYSE corporate governance standards requires that a listed company
have a nominating/corporate governance committee and a compensation committee
each



                                     123
<PAGE>



composed entirely of independent directors with a written charter that
addresses certain duties. "Controlled companies" such as AmBev need not comply
with this requirement.

          In addition, we are not required under Brazilian law to have, and
accordingly we do not have, a nominating committee, corporate governance
committee or compensation committee. Currently, all of our directors are
nominated by our controlling shareholders. The role of the corporate
governance committee is generally performed by either our board of directors
or our senior management. With respect to compensation, under Brazilian
corporate law, the shareholders determine the total or individual compensation
of the companys directors and executive officers, including benefits and
allowances at a general shareholder's meeting.

          AUDIT COMMITTEE AND AUDIT COMMITTEE ADDITIONAL REQUIREMENTS

          NYSE corporate governance standards require that a listed company
has an audit committee composed of three independent members that satisfy the
independence requirements of Rule 10A-3 under the Exchange Act, with a written
charter that addresses certain duties.

          The Brazilian corporate law requires us to have a non-permanent
fiscal committee. The fiscal committee operates independently from our
management and from our registered independent public accounting firm. Its
principal function is to examine the financial statements of each fiscal year
and provide a formal report to our shareholders. We do not maintain a
permanent fiscal committee; however, our shareholders have annually approved
the establishment of a fiscal committee since its first adoption in 2000,
right after CADE officially approved the combination (both Brahma and
Antarctica had implemented their respective fiscal committees prior to the
combination).

          We also have an audit committee, but it is not composed of
independent directors. In order to comply with the requirements of the
Sarbanes-Oxley Act and the rules of the NYSE, we are committed to altering the
composition of our audit committee so that it contains solely independent
members by July 2005.

          SHAREHOLDER APPROVAL OF EQUITY COMPENSATION PLANS

          NYSE corporate governance standards require that shareholders of a
listed company must be given the opportunity to vote on all equity
compensation plans and material revisions thereto, subject to certain
exceptions.

          Our board of directors is responsible for voting on the issuance of
new equity in connection with our existing stock option plans, provided that
the limit of our authorized capital is respected. Any issuance of new shares
that exceeds such authorized capital is subject to shareholder approval.

          CORPORATE GOVERNANCE GUIDELINES

          NYSE corporate governance standards require that a listed company
must adopt and disclose corporate governance guidelines that address certain
minimum specified



                                     124
<PAGE>



standards which include, director qualification standards, director
responsibilities, director access to management and independent advisors,
director compensation, director orientation and continuing education,
management succession, annual performance evaluation of the board.

          We believe the corporate governance guidelines applicable to us
under Brazilian corporate law are consistent with the guidelines established
by the NYSE. We have adopted and observe the Policy of Disclosure of Acts or
Relevant Facts and the Preservation of Confidentiality, which deals with the
public disclosure of all relevant information as per CVM's guidelines. Also,
we comply with the CVM rules relating to transactions involving the dealing by
our management in our securities.

          We have a constantly updated investor relations website. We also
host quarterly conference calls with investors which are broadcasted live
through the internet and have prepared a manual for disclosure and information
use and the policies for negotiating securities, which is also available at
our website.

         CODE OF BUSINESS CONDUCT AND ETHICS

          NYSE corporate governance standards require that a listed company
must adopt and disclose a code of business conduct and ethics for directors,
officers and employees and promptly disclose any waivers of the code for
directors or officers.

          We have adopted a code of ethics that applies to all officers and
employees. There are no waivers to our code of ethics.

         CERTIFICATION REQUIREMENTS

          NYSE corporate governance standards require that each listed
company's Chief Executive Officer must certify to the NYSE each year that he
or she is not aware of any violation by the company of NYSE corporate
governance standards.

          As required by Section 303A.12(b) of the NYSE corporate governance
standards, our Chief Executive Officer will promptly notify the NYSE in
writing after any of our executive officers becomes aware of any material
non-compliance with any applicable provisions of the NYSE corporate governance
standards.


                                     125
<PAGE>



Major Shareholders and Related Party Transactions

                              MAJOR SHAREHOLDERS

INTRODUCTION

          As of May 31, 2004, AmBev had 15,631,332,792 common voting shares
and 21,732,192,808 preferred non-voting shares outstanding. AmBev has
registered two classes of American Depositary Shares (ADSs) pursuant to the
Securities Act: ADSs evidenced by American Depositary Receipts (ADRs)
representing 100 preferred shares, and ADSs evidenced by ADRs representing 100
common shares. As of May 31, 2004, there were 90,322,022 preferred ADSs
outstanding (representing 9,032,202,200 preferred shares) and 576,171 common
ADSs outstanding (representing 57,617,100 common shares). AmBev ADRs are
issuable by The Bank of New York pursuant to deposit agreements for common and
preferred shares.

CONTROL

          AmBev is controlled by Braco Investimentos S.A., ECAP and the FAHZ,
which own in the aggregate 77.08% of AmBev's common shares outstanding. In
addition, Braco Investimentos S.A., ECAP and the FAHZ, as well as Marcel
Telles, Jorge Paulo Lemann and Carlos Sicupira, as intervening parties, are
parties to a shareholders' agreement relating to AmBev. See "--AmBev
Shareholders' Agreement". As of May 31, 2004, FAHZ owns 24.27% of the common
shares outstanding of AmBev. Braco Investimentos S.A. and ECAP collectively
own 52.80% of the common shares outstanding of AmBev. Braco Investimentos S.A.
owns 99.74% of the voting shares of ECAP. Braco Investimentos S.A. is an
investment company, substantially all the assets of which consist of the
shares of AmBev and ECAP previously held by Braco S.A..

          Braco S.A., which used to own the AmBev common shares and ECAP
shares now owned by Braco Investimentos S.A., was itself controlled by S-Braco
Participacoes S.A. ("S-Braco"), an investment company, substantially all the
assets of which consisted of shares of AmBev and Braco S.A. 50%, 25% and 25%,
respectively, of the common shares of S-Braco were indirectly owned by Mr.
Lemann, Mr. Sicupira and Mr. Telles through four Brazilian holding companies,
Santa Judith Participacoes S.A. ("Santa Judith"), Santa Irene Participacoes
S.A. ("Santa Irene"), Santa Estela Participacoes S.A. ("Santa Estela") and
Santa Prudencia Participacoes S.A. ("Santa Prudencia", and together with Santa
Judith, Santa Irene and Santa Estela, the "Santas"). In connection with the
internal restructuring of the SB Group Companies pursuant to the Contribution
and Subscription Agreement, (i) all AmBev common shares previously owned by
S-Braco were transferred to Braco S.A., (ii) S-Braco and the Santas were
dissolved and, most recently, (iii) Braco S.A. transferred all of the AmBev
common shares (including the AmBev common shares originally held by S-Braco)
and all of the ECAP shares held by it to Braco Investimentos S.A. Messrs.
Lemann, Telles and Sicupira currently indirectly own, respectively,
approximately 42.12%, 18.82% and 15.17% of the voting shares and total capital
stock of Braco Investimentos S.A. Upon completion of the internal
restructuring of the SB Group Companies pursuant to the Contribution and
Subscription Agreement, Messrs. Lemann, Telles and Sicupira will own,
respectively, 50%, 25% and 25% of the successor to S-Braco, which will
indirectly own (through BRC S.A.) approximately 81.63% of the voting shares
and total capital stock of Braco Investimentos S.A.

          SHARE BUYBACK PROGRAM

          In 2003, we acquired 63.5 million common shares and 529.3 million
preferred shares in connection with our share buyback program, at a cost of
R$310.0 million. In 2002, we acquired 89.5 million common shares and 701.3
million preferred shares in connection with our share buyback program,
totaling R$337.1 million. Both in 2003 and 2002, a portion of the common
shares and preferred shares purchased by us were acquired by us pursuant to
put options sold in connection with our share buyback program.


                                     126
<PAGE>


AMBEV'S MAJOR SHAREHOLDERS

          The following table sets forth information, as of May 31, 2004 with
respect to any person known to AmBev to be the beneficial owner of 5% or more
of AmBev's outstanding shares:

<TABLE>
<CAPTION>

                                                   Amount and Percentage            Amount and Percentage
                                                     of Common Shares                of Preferred Shares
                                                -------------------------          ------------------------
<S>                                                  <C>                <C>             <C>             <C>
The Bank of New York - ADR Department(1)....       57,617,100        0.37%         9,032,202,200     41.56%
Braco Investimentos S.A.(2).................    4,214,345,035       26.96%                     -          -
ECAP(3).....................................    4,039,568,225       25.84%                     -          -
FAHZ(4).....................................    3,794,204,726       24.27%           397,172,513      1.83%
Caixa da Previdencia dos Funcionarios do
Banco Central do Brasil - PREVI.............       73,340,770        0.47%         3,323,156,855     15.29%
Fundacao Banco Central Previdencia
Privada--Centrus.............................     853,197,735        5.46%                     -          -
Marcel Herrmann Telles(5) ..................                5        0.00%           213,145,000      0.98%
Jorge Paulo Lemann(6).......................               10        0.00%                     -          -
Carlos A. Sicupira(7).......................                5        0.00%                     -          -

<FN>
(1)  Represents the number of shares held in the form of ADSs. The Bank of New
     York is the depositary of AmBev shares in accordance with the deposit
     agreement entered into with AmBev and the owners of AmBev ADSs.

(2)  Does not include shares owned by ECAP. Braco Investimentos S.A. owns
     99.74% of the voting shares of ECAP. Mr. Telles, a Co-Chairman of the
     Board of Directors of AmBev and a counselor of the FAHZ, Mr. Lemann and
     Mr. Sicupira, each a member of the Board of Directors of AmBev, currently
     indirectly own, respectively, approximately 18.82%, 42.12% and 15.17% of
     the voting shares and total capital stock of Braco Investimentos S.A.

(3)  Does not include shares owned by Braco Investimentos S.A. Braco
     Investimentos S.A. owns 99.74% of the voting shares of ECAP. Mr. Telles,
     a Co-Chairman of the Board of Directors of AmBev and a counselor of the
     FAHZ, Mr. Lemann and Mr. Sicupira, each a member of the Board of
     Directors of AmBev, currently indirectly own, respectively, approximately
     18.82%, 42.12% and 15.17% of the voting shares and total capital stock of
     Braco Investimentos S.A.

(4)  Mr. Telles, Victorio Carlos De Marchi, Jose Heitor Attilio Gracioso and
     Roberto Herbster Gusmao, directors of AmBev, and Jose Adilson Miguel, an
     officer of AmBev, are counselors of the FAHZ.

(5)  Does not include 8,253,913,260 common shares owned by Braco Investimentos
     S.A. and ECAP. Mr. Telles currently indirectly own approximately 18.82%
     of the voting shares and total capital stock of Braco Investimentos S.A.,
     which, in turn, owns 99.74% of the voting shares of ECAP, and is also an
     intervening party to the AmBev shareholders' agreement.

(6)  Does not include 8,253,913,260 common shares owned by Braco Investimentos
     S.A. and ECAP. Mr. Lemann currently indirectly own approximately 42.12%
     of the voting shares and total capital stock of Braco Investimentos S.A.,
     which, in turn, owns 99.74% of the voting shares of ECAP, and is also an
     intervening party to the AmBev shareholders' agreement.

(7)  Does not include 8,253,913,260 common shares owned by Braco Investimentos
     S.A. and ECAP. Mr. Sicupira currently indirectly own approximately 15.17%
     of the voting shares and total capital stock of Braco Investimentos S.A.,
     which, in turn, owns 99.74% of the voting shares of ECAP, and is also an
     intervening party to the AmBev shareholders' agreement.
</FN>
</TABLE>

          For a description of the Company's major shareholders' voting
rights, see "AmBev Shareholders' Agreement".

          OPTIONS AND WARRANTS

          On February 14, 1996, Brahma's Board of Directors approved the
private placement of 404,930,519 warrants at R$50 per 1,000-share lot,
exercisable on a one-to-five basis (already adjusted for the stock split that
occurred in 2000) during the month of April 2003 at a strike price of
R$1,000.00 per one thousand common or preferred shares (the right of each
warrant to subscribe for shares would be adjusted proportionately should there
be any splits, reverse splits or distributions of stock dividends). Each
warrant was originally issued to holders of a block of 17 shares of Brahma,
whether preferred or common. The subscription price for each of the warrants
was adjusted pursuant to the IGP-M inflation index, reduced by dividends paid
and accrued interest at the rate of 12% per year. At the Brahma shareholders'
meeting that considered the Brahma conversion, common shareholders voted to
cancel the Brahma warrants and replace them with new AmBev warrants, which
entitled holders to subscribe for AmBev shares in accordance with the original
terms and conditions applicable to the Brahma warrants. The



                                     127
<PAGE>


404,930,519 warrants entitled holders to subscribe for a total of 710,195,105
newly issued common shares and 1,314,457,490 newly issued preferred shares of
AmBev.

          Although the warrants expired in April 2003 without being exercised,
the criteria to be used in the calculation of the strike price of the warrants
is being disputed by a number of holders of warrants in the courts of Sao
Paulo and Rio de Janeiro. These proceedings may yet result in the issuance of
shares pursuant to the warrants. See "Financial Information--Consolidated
Financial Statements and Other Information--Legal Proceedings--Options and
Warrants."



AMBEV SHAREHOLDERS' AGREEMENT

          On July 1, 1999 FAHZ, Braco S.A. and ECAP, as well as AmBev and
Messrs. Jorge Paulo Lemann, Marcel Telles and Carlos Alberto Sicupira, the
latter four as intervening parties, entered into a shareholders agreement (the
"AmBev Shareholder's Agreement") with respect to the voting of the shares of
AmBev and the voting by AmBev of the shares of its subsidiaries (including
Brahma and Antarctica), among other matters.

          On March 2, 2004, the FAHZ, Braco S.A. and ECAP, along with AmBev,
Mr. Lemann, Mr. Sicupira, Mr. Telles and Interbrew, as intervening parties,
executed the first amendment to the AmBev Shareholders' Agreement to, among
other things, (i) provide that each of the FAHZ, Braco S.A. and ECAP may
appoint two observers to the meetings of the board of directors of AmBev,
without a right to vote; (ii) create a financial committee and an audit
committee; (iii) provide that Braco S.A. and ECAP shall have the right to
elect, from among the directors they are entitled to appoint, one effective
member and the respective alternate appointed by Interbrew; (iv) eliminate the
right of first refusal with respect to the dispositions of AmBev shares; (v)
restrict the disposal of shares, directly or indirectly, by the FAHZ, Braco
S.A. and ECAP through private trades, on the securities market or on the
over-the-counter market, including by way of tender offers, either voluntary
or mandatory, as long as the corporate control of Interbrew is shared with Mr.
Lemann, Mr. Sicupira and Mr. Telles, except for the indirect disposal of
shares among Mr. Lemann, Mr. Sicupira and Mr. Telles or to Interbrew or its
affiliates and other limited exceptions; (vi) terminate the provisions
relating to the buy-sell rights of the FAHZ, Braco S.A. and ECAP; and (vii)
extend the term of the agreement so as to expire on July 1, 2019, subject to
the option of Braco S.A. and ECAP to accelerate the termination of the AmBev
Shareholders' Agreement in the event that the current procedure for the
election of the members of the Board of Trustees of the FAHZ is modified or
ceases to be observed, other than as a result of a change in law or regulation
applicable to the FAHZ. Furthermore, the first amendment to the AmBev
Shareholders' Agreement approved amending AmBev's bylaws to increase the
mandatory minimum dividend to 35%.

          The following discussion relates to the AmBev Shareholders'
Agreement, as modified by the first amendment. In addition, Braco Investimentos
S.A. has succeeded to the rights and obligations of Braco S.A. under the AmBev
Shareholders' Agreement, as so amended.

          MANAGEMENT OF AMBEV

          Although each common share of AmBev entitles shareholders to one
vote in connection with the election of AmBev's Board of Directors, AmBev's
controlling shareholders, the FAHZ, Braco Investimentos S.A. and ECAP, have
the ability to elect the majority of AmBev's directors. Because the election
of any director by minority (non-controlling) shareholders would require,
under Law 6,404/76, at the time of execution of the AmBev Shareholders'
Agreement, the adoption of a cumulative vote procedure, the provisions of the
AmBev Shareholders' Agreement on the management of AmBev were based on the
assumption that no directors will be elected by minority shareholders of
AmBev.



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          Due to the changes introduced by Law No. 10,303/01, minority
shareholders holding at least 15% of voting capital and preferred shareholders
(whose shares are not entitled to vote or are entitled to a restricted voting
right) holding at least 10% of the company's total capital may elect one
member of the Board of Directors and its alternate member. Additionally, if
neither the minority shareholders nor the preferred shareholders (whose shares
are not entitled to vote or are entitled to a restricted voting right) do not
achieve such percentages as mentioned above, they can jointly appoint one
member of the Board of Directors and its alternate member once they represent,
together, at least 10% of the companys total capital. In order to exercise
these rights, any of these shareholders must prove that it has uninterruptedly
held the corresponding shares for at least three months prior to the
respective shareholders' meeting.

          If such prerogative is exercised collectively with the adoption of a
cumulative voting procedure, the controlling shareholders are entitled to
elect the same number of members plus one, independently of the number of
directors.

          Additionally, until the 2005 annual shareholders meeting, the
director appointed by preferred shareholders (individually or cumulatively)
shall be selected from a three-name list previously prepared by the
controlling shareholder.

          Presently, under the AmBev Shareholders' Agreement, as amended, each
of the FAHZ, Braco Investimentos S.A. and ECAP will have representation on the
Board of Directors of AmBev and its subsidiaries and, in addition to the
members and respective alternates they are entitled to appoint, each of FAHZ,
on the one hand, and Braco Investimentos S.A. and ECAP, on the other hand, may
appoint up to two observers to attend AmBev's board meetings, without voting
rights. The boards of directors of AmBev and its subsidiaries will each be
comprised of at least three and no more than 15 regular members and the same
number of alternates, with a term of office of three years and reelection
being permitted. FAHZ will have the right to appoint four directors and their
respective alternates to the boards of directors of AmBev and its
subsidiaries, so long as it maintains a minimum ownership of AmBev voting
shares equivalent to the ownership of common shares that FAHZ held as of July
1, 1999, when the AmBev Shareholders' Agreement was entered into. At that time
FAHZ held 459,521,728 common shares, which was adjusted for the five-for-one
stock split that took effect on October 23, 2000 and is currently equivalent
to 2,297,608,640 common shares. FAHZ is not allowed under the AmBev
Shareholders' Agreement to appoint more than four directors in the event that
its holding of AmBev common shares increases. FAHZ will always be entitled to
appoint at least one director as long as it holds a minimum of 10% of AmBev's
voting shares. Braco Investimentos S.A. and ECAP, acting jointly, have the
right to appoint members and their respective alternates to the boards of
directors of AmBev and its subsidiaries, in a number proportionate to the
number of members appointed by FAHZ. Such proportion is based on the ratio
between the FAHZ's holding and the aggregate holdings of Braco Investimentos
S.A. and ECAP in the voting capital of AmBev. According to the amended AmBev
Shareholders' Agreement, Braco Investimentos S.A. and ECAP shall have the
right to elect, from among the directors whom they are entitled to appoint in
the manner provided for in Item 4.2 of the first amendment to the AmBev
Shareholders' Agreement, one effective member, and respective alternate,
appointed by Interbrew.

          The AmBev Shareholders' Agreement provides that AmBev will have two
co-Chairmen with identical rights and duties, one appointed by FAHZ and the
other by Braco Investimentos S.A. and ECAP, jointly. In the event of a
deadlock, neither of the Co-Chairmen has a deciding vote on matters submitted
to the Board of Directors of AmBev.

          Each of FAHZ, or Braco Investimentos S.A. and ECAP together, may
remove a director that it has appointed to the Board of Directors of AmBev or
its subsidiaries, and each also has the right to appoint the respective
replacement or a new alternate, if the originally appointed alternate is
confirmed for the vacant position.


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          Each of FAHZ, Braco Investimentos S.A. and ECAP has agreed to
exercise its voting rights in the shareholders' meetings of AmBev and its
subsidiaries in such a way that it may elect the largest possible number of
directors in each of AmBev and its subsidiaries. The FAHZ, Braco Investimentos
S.A. and ECAP will agree on the method of casting their votes in order to
accomplish this purpose in the event of adoption of cumulative vote procedure
under Brazilian law, under which each common share is entitled to as many
votes as there are directors to be elected.

          The AmBev Shareholders' Agreement establishes that the shareholders
may, by consensus, establish committees within the AmBev's board of directors,
with the purpose of looking into specific matters which analyses require that
their members have specific technical knowledge. The Audit Committee, the
Consulting Committee, the Executive Committee, the Financial Committee and the
Fiscal Committee have already been created. See "Directors, Senior Management
and Employees - Board Practices and Corporate Governance".

          The AmBev Shareholders' Agreement provides that AmBev will have
one Chief Executive Officer (Director General) and Officers with no specific
designation to be elected by AmBev's Board of Directors.

         Preliminary Meetings and Exercise of Voting Rights.

          On matters submitted to a vote of the shareholders or their
representatives in the boards of directors of AmBev or its subsidiaries, FAHZ,
Braco Investimentos S.A. and ECAP have agreed to endeavor first to reach a
consensus with respect to voting their common shares of each of AmBev and its
subsidiaries, and as how to direct their representatives to vote on the matter
being submitted. Law No. 10,303/01 recognizes the shareholders agreement as
the appropriate instrument to determine how power should be exercised by the
controlling shareholders. In order to reach such a consensus (except with
respect to the election of Board members, which is subject to specific rules),
the AmBev Shareholders' Agreement provides that the parties shall hold a
preliminary meeting in advance of all meetings of shareholders or boards of
directors of AmBev or of its subsidiaries, with the purpose of discussing and
determining a consensus position to be taken by the parties in such meetings.
This procedure makes it more likely that a matter approved by the controlling
shareholders will also be approved at a shareholders' meeting.

          If the parties fail to reach a consensus with respect to a
particular matter, the position to be adopted by all parties to the agreement
will be determined by the group holding the greatest number of AmBev voting
common shares, which currently are Braco Investimentos S.A. and ECAP. However,
this rule does not apply in connection with the election of members of boards
of directors, as described above under "Management of AmBev", and with respect
to fundamental matters which require unanimous approval by FAHZ, Braco
Investimentos S.A. and ECAP, as follows:

          o    any amendment to the bylaws of AmBev and/or any of its
               subsidiaries with the purpose of amending: (i) the corporate
               purposes, (ii) the term of duration, and/or (iii) the
               composition, powers and duties of the management bodies;

          o    approval of the annual investment budget of AmBev and/or any of
               its subsidiaries when the amount of the investments exceed 8.7%
               of net sales of the company foreseen for the same fiscal year.

          o    designation, dismissal and substitution of the Chief Executive
               Officer of AmBev;

          o    approval or amendment to the renumeration policy for the Board
               of Directors and of the executive board of AmBev as well as of
               its subsidiaries;


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<PAGE>


          o    approval of stock option plans for the managers and employees
               of AmBev and/or its subsidiaries;

          o    change in the dividend policy of AmBev and/or any of its
               subsidiaries;

          o    increases in the capital of AmBev and/or any of its
               subsidiaries, with or without preemptive rights, through
               subscription, creation of a new class of shares, or changes in
               the characteristics of the existing shares, as well as
               decreases of capital, issuances of debentures (whether or not
               convertible into shares), warrants, and the creation of
               founders' shares by AmBev and/or any of its subsidiaries except
               when such legal businesses are carried out between AmBev and
               its subsidiaries or between the subsidiaries;

          o    amalgamations, spin-offs, transformations, mergers,
               acquisitions, and divestments involving AmBev and/or any of its
               subsidiaries, in the latter case, (a) when such operation
               involves a company that is not a subsidiary, directly or
               indirectly, of AmBev, and (b) provided that the transaction in
               question results in the reduction in the average dividend paid
               by AmBev in the past five years, adjusted by the IGP-M
               published by Fundacao Getulio Vargas as of the date of payment;

          o    the creation, acquisition, assignment, transfer, establishment
               of an encumbrance on and/or disposal of shares, quotas and/or
               any securities issued by any of AmBev's subsidiaries, under any
               title or form, except in the benefit of AmBev and/or another
               subsidiary;

          o    the incurrence by AmBev and/or any of its subsidiaries of a
               debt transaction that results in a net debt/equity ratio
               greater than 60/40;

          o    the execution, amendment, termination, renewal or cancellation
               of any contracts, agreements or the like involving the
               registered or deposited trademarks of AmBev or its
               subsidiaries;

          o    the extension of loans or the offer of guarantees of any kind
               by AmBev and/or any of its subsidiaries to any third parties in
               an amount greater than 1% of AmBev's shareholders' equity as
               set forth in the last audited balance sheet prepared in
               accordance with Brazilian GAAP, except in favor of employees of
               AmBev and its subsidiaries, or in favor of the subsidiaries
               themselves;

          o    election of members of committees of AmBev's Board of
               Directors;

          o    cancellation of the registration of AmBev and/or any of its
               subsidiaries as publicly traded companies;

          o    petition for an arrangement with creditors (concordata) or
               acknowledgment of bankruptcy by AmBev and/or any of its
               subsidiaries;

          o    liquidation or dissolution of AmBev and/or any of its
               subsidiaries; and

          o    appointment of the external auditors of AmBev and/or any of its
               subsidiaries.

          The AmBev Shareholders' Agreement provides that whenever the parties
fail to reach a consensus in a preliminary meeting as to any matter listed
above, they will exercise their voting rights so as not to approve such
matter. The AmBev Shareholders' Agreement provides that any votes cast by
FAHZ, Braco or ECAP, or by any of the board members appointed by each of them,
in violation of the provisions of the agreement will be deemed null, void and
ineffective.


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<PAGE>


         Transfer of Shares

          The AmBev Shareholders' Agreement contains the following provisions
concerning the transfer of shares:

          o    FAHZ, Braco Investimentos S.A. and ECAP have agreed: (i) not to
               dispose, directly or indirectly, of their shares, through
               private trades, on the stock market or on the over-the-counter
               market, including by way of tender offers, either voluntary or
               mandatory, except as provided for in Section VI of the AmBev
               Shareholders Agreement, during the term of the agreement, and
               (ii) not to create any type of encumbrance on its shares, in
               both cases, without the prior written consent of FAHZ, in the
               case of Braco Investimentos S.A. and ECAP, and without the
               prior written consent of Braco Investimentos S.A. and ECAP, in
               the case of FAHZ;

          o    In the event that the shares of AmBev owned by FAHZ on one
               hand, and Braco Investimentos S.A. and ECAP, on the other hand
               become subject to seizure, attachment, judicial surety or any
               other restrictive measure, and such restriction is not removed
               or waived within 30 days after its imposition, the shares
               subject to the restriction shall be automatically deemed
               offered for sale to the other party. This offer will remain
               open for 30 days, and the price for the AmBev shares will be
               the lesser of either the book value of the AmBev shares, as per
               the latest audited balance sheet of AmBev, prepared in
               accordance with Brazilian GAAP, and adjusted by the IGP-M
               inflation index or the average quoted market price of the AmBev
               shares on stock exchanges in the 20 days prior to the petition
               for removal or waiver of the restriction. If the obligations in
               respect of such restriction exceed the above price, the party
               whose shares have been subject to the restriction will be
               liable for the difference that the other party may be required
               to deposit in order to acquire the shares. If the obligations
               in respect of such restriction were lower than the price for
               the AmBev shares as described above, than the party whose
               shares have been subject to the restriction will be entitled to
               receive the difference between the price for the AmBev shares
               and the obligations in respect of such restriction.

          o    If any of FAHZ, on one hand, and Braco Investimentos S.A. and
               ECAP, together on the other hand, intends to dispose of
               subscription rights corresponding to AmBev shares that it
               holds, it must first offer such rights to the other party, who
               will then be required to exercise its right of first refusal to
               subscribe the new shares to be issued, within 10 days;

          The shareholders' agreement provides that any transfer of shares or
subscription rights or creation of encumbrances in which the aforementioned
provisions on rights of first refusal are not observed will not be valid.
AmBev's management is also prohibited from reflecting any such events in the
company's corporate books and recent changes introduced by Law No. 10,303/01
confirms the applicability of the AmBev Shareholders' Agreement in such cases.

         SPECIFIC PERFORMANCE

          Obligations of the parties under the AmBev Shareholders' Agreement
will be subject not only to specific performance but will also bind third
parties to the terms of the agreement, in effect declaring null and void any
action taken in its contravention so long as rights and obligations of third
parties stem from the agreement.


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SHAREHOLDERS' VOTING RIGHTS AGREEMENT

          As of August 30, 2002, each of the Santas, with Mr. Lemann, Mr.
Sicupira and Mr. Telles, as intervening parties and S-Braco, Braco S.A., ECAP
and AmBev, as acknowledging parties, entered into a shareholders' voting
rights agreement (the "Shareholders' Voting Rights Agreement") with respect to
Mr. Lemann's, Mr. Sicupira's and Mr. Telles' respective indirect interests in
each of S-Braco, Braco S.A., ECAP and AmBev. In the Shareholders' Voting
Rights Agreement, each of the Santas (and Mr. Lemann, Mr. Sicupira and Mr.
Telles) agreed to exercise their respective influence in S-Braco, Braco S.A.,
ECAP and AmBev in full compliance with the terms of the Shareholder's Voting
Rights Agreement. The Santas agreed that the board of Directors of S-Braco
shall consist of four members and that the executive committees of Braco S.A.
and ECAP should consist of two to four members, respectively. Each block of
voting shares representing 25% of the voting shares of S-Braco shall entitle
its owner(s), at all times, to designate (i) one member of the Board of
Directors of S-Braco, (ii) one member of the executive committees of Braco
S.A. and ECAP, respectively, and (iii) one member of the Board of Directors of
AmBev and the respective alternate member (or such higher number of
individuals as proves necessary to maintain control over AmBev's Board of
Directors, alone or in conjunction with FAHZ, pursuant to the AmBev
Shareholder's Agreement). The Santas further agreed that resolutions
concerning S-Braco, Braco S.A., ECAP and AmBev relating to certain issues may
only be approved by prior unanimous vote of the Santas. On other issues not
requiring unanimity, Mr. Lemann, Mr. Sicupira and Mr. Telles, as the
controlling shareholders of the Santas, shall in turn, have a binding personal
casting vote to resolve any deadlock with respect to such issues. The
Shareholder's Voting Rights Agreement also contained, among others, terms and
conditions (a) restricting the vehicles by which Mr. Lemann, Mr. Sicupira and
Mr. Telles, and their respective direct descendants could hold shares of
S-Braco, Braco S.A., ECAP and AmBev and (b) prohibiting the pledging of shares
of S-Braco, Braco S.A., ECAP and AmBev by any of the Santas as security for
the obligations of third parties which could result in the potential transfer
of ownership or control of such shares.

          Additionally, Santa Judith, Santa Irene, Santa Estela and Santa
Prudencia, as well as Mr. Lemann, Mr. Sicupira and Mr. Telles, the latter
three as intervening parties, were parties to a shareholders' property rights
agreement relating to the disposition of shares of S-Braco.

          Notwithstanding the dissolution of S-Braco and the Santas or any
other transaction in connection with the internal restructuring of the SB
Group Companies pursuant to the Contribution and Subscription Agreement,
Messrs. Lemann, Telles and Sicupira have entered into an agreement confirming
that their relationship with respect to their interests in Braco Investimentos
S.A., ECAP and AmBev will continue to be governed by substantially similar
arrangements.


AMBEV SHARE TRANSFER AGREEMENT AND AMBEV GOVERNANCE AGREEMENT

          Pursuant to the stock purchase agreement dated May 1, 2002 (as
amended, the "Stock Purchase Agreement"), between AmBev and BAC, for the
purchase by AmBev of 230,920,000 Class A common shares, without par value, of
Quinsa, on January 31, 2003, FAHZ, Braco S.A. and ECAP, as well as AmBev and
BAC entered into (i) a share transfer agreement related to the capital stock



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<PAGE>


of AmBev (the "AmBev Share Transfer Agreement") and (ii) a governance
agreement related to the governance of AmBev (the "AmBev Governance
Agreement"). The AmBev Share Transfer Agreement and the AmBev Governance
Agreement will not become effective until shares of AmBev are acquired by BAC.

          Pursuant to the AmBev Share Transfer Agreement, among other things,
(i) BAC has agreed not to transfer any common shares of AmBev held by BAC,
except for transfers to affiliates or family members ("Permitted
Transferees"), other than in accordance with the provisions of the AmBev
Shareholders Agreement, (ii) BAC and its Permitted Transferees have granted
Braco S.A. and ECAP a right of first refusal on any transfer of common shares
of AmBev to third parties, pursuant to which BAC will not transfer any common
shares of AmBev (except to Permitted Transferees) unless BAC or its Permitted
Transferees shall have first offered to sell such common shares of AmBev to
Braco S.A. and ECAP, (iii) Braco S.A. and ECAP have granted BAC and its
Permitted Transferees tag-along rights pursuant to which BAC and its Permitted
Transferees have the right to sell at the same price and on the same terms and
conditions as Braco S.A. and ECAP in connection with any sale by Braco S.A.
and ECAP of more than 50% of the AmBev shares held by Braco S.A. and ECAP to a
third person or any sale of a majority of the outstanding shares of Braco and
ECAP (for the implications of such tag along rights for the Interbrew-AmBev
transactions see "Background on the Company - The Interbrew-AmBev Transactions
Contribution and Subscription Agreement - BAC Tag-along Right", (iv) BAC and
its Permitted Transferees have granted Braco S.A. and/or ECAP drag-along
rights pursuant to which in the event that Braco S.A. or ECAP propose to sell
in a bona fide arm's-length sale more than 50% of their common shares of AmBev
to any unaffiliated third party, Braco S.A. and ECAP have the right to require
BAC and its Permitted Transferees to sell to the proposed transferee all or a
portion of their common shares of AmBev for the same per share consideration,
in the same pro rata portion and on the same terms and conditions as proposed
to be received by Braco and ECAP, and (v) AmBev has granted to BAC and its
Permitted Transferees the preemptive rights set forth in Article 171 of the
Brazilian corporation law. Pursuant to the AmBev Governance Agreement, among
other things, (i) BAC and its Permitted Transferees have the right to nominate
a number of directors of AmBev proportionate to their percentage ownership of
the total outstanding common shares of AmBev, provided that BAC and its
Permitted Transferees have the right to nominate at least one director as long
as BAC and its Permitted Transferees continue to own at least 90% of the
common shares of AmBev acquired by them pursuant to the options under the
Stock Purchase Agreement and (ii) for so long as BAC and its Permitted
Transferees have at least 90% of the shares of AmBev acquired pursuant to the
consummation of the options, certain matters will not be approved by the
shareholders meeting or the board of directors of AmBev without the vote of
BAC.


                          RELATED PARTY TRANSACTIONS

MATERIAL RELATED PARTY TRANSACTIONS

          We engage in the purchase and sale of raw material with affiliated
entities, which are eliminated on consolidation in our financial statements,
with the exception of entities under common control (which are proportionally
consolidated), as described in note 2 (b) to our financial statements.

          AmBev has entered into an agreement with FAHZ for the purchase of
certain labels for the beer packaging. FAHZ, as described in "Operating and
Financial Review and Prospects - Critical Accounting policies", provides
medical, dental and social assistance to current and former employees and
their dependents. FAHZ owned 24.1% of AmBev's voting shares and 10.9% of our
total shares on December 31, 2003. FAHZ is not consolidated in our Brazilian
GAAP financial statements. During the year ended December 31, 2003, we
purchased labels on an arms-length basis with a value of R$25.3 million from
the FAHZ.

          The Company financed in the past its employees' purchases of shares
pursuant to AmBev's stock ownership plan. See "Directors, Senior Management
and Employees - Employees - Stock Ownership Plan". Such financing option has,
however, been removed from the stock ownership plans approved subsequent to
the enactment of the Sarbanes-Oxley Act. Nevertheless, the previous stock
ownership plans provide for such extensions of credit, even though none have
been requested to date.

          We have entered into a variety of agreements with Quinsa and BAC,
Quinsa's controlling shareholder, relating to the acquisition of our interest
in Quinsa. See "Information on the Company - Acquisition of Interest in
Quinsa".




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<PAGE>

          Between June 6, 2003 and June 16, 2003, we acquired from Mr. Marcel
Herrmann Telles, a director of AmBev and a member of our controlling group,
156,875,520 preferred shares held directly by him which had been subscribed by
Mr. Telles upon exercise of certain rights to acquire shares granted to him
under the stock ownership plan. Pursuant to the stock ownership plan, if the
holder is going to sell the shares more than 60 months after the shares are
acquired by the employee, we have the right to buy the preferred shares issued
thereunder at market price. Mr. Telles sold his 156,875,520 preferred shares
to us more than 60 months after he acquired the shares, for which we paid
R$93.4 million, which was the market price of the shares calculated pursuant
to the terms of the stock ownership plan.

          On June 3, 2004, we acquired from Mr. Magim Rodriguez Junior, a
director of AmBev, 160,000,000 preferred shares held directly by him which had
been subscribed by Mr. Rodriguez upon exercise of certain rights to acquire
shares granted to him under the stock ownership plan. Pursuant to the stock
ownership plan, if the holder is going to sell the shares more than 60 months
after the shares are acquired by the employee, we have the right to buy the
preferred shares issued thereunder at the market price. Mr. Rodriguez sold his
160,000,000 preferred shares to us more than 60 months after he acquired the
shares, for which we paid R$96.5 million, which was the market price of the
shares calculated pursuant to the terms of the stock ownership plan.



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Financial Information

       CONSOLIDATED FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION

CONSOLIDATED FINANCIAL STATEMENTS

          See "Financial Statements".



LEGAL PROCEEDINGS

          Except as set forth below, there are no legal proceedings to which
we are party, or to which any of our properties are subject which, either
individually or in the aggregate, may have a material adverse effect on our
results of operations, liquidity or financial condition. For further details,
see note 12 of our consolidated financial statements.

          CIVIL CLAIMS.

          As of March 31, 2004 we had 3,261 civil claims pending, including
distributors and product related claims. We are the plaintiff in 1,334 and the
defendant in 1,927 of these claims, respectively. We have established
provisions in the amount of R$100.3 million as of December 31, 2003, in
connection with civil claims in which we believe there is a probable chance of
loss.

          On December 2, 2002, a court in the state of Rio Grande do Sul
prohibited the sale of Kronenbier in that state on the grounds that the beer
could not be classified as a non-alcoholic beverage because it has a 0.34%
alcohol level. We have appealed this ruling and a final decision by the
supreme court is pending. Meanwhile, the superior court has temporarily
allowed the sale of Kronenbier in the State of Rio Grande do Sul. The lawsuit
aims to suspend the sale of the beer only. In a similar lawsuit pending in the
state of Parana, damages and the reimbursement of the revenues from the
Kronenbier sales in Parana are demanded. We believe that our views will
prevail in this matter and have not made a provision for any amount.

          On April 11, 2003, the Federal District Public Attorney initiated an
administrative civil public investigation regarding advertisements that
allegedly have the potential to induce teenagers and children to consume
alcoholic beverages in a Skol and Brahma beer marketing campaign. We are
negotiating a settlement with the Federal District Public Attorney and on May
07, 2004, we filed a petition informing it about our educational campaigns and
social projects for the Brazilian population, together with a draft providing
for adjustments to our marketing campaigns to avoid any possible inducement of
teenagers and children to consume alcoholic beverages. We believe that the
investigation will end without any material disbursement on our part and
therefore have not made a provision for any amount in connection with this
investigation.

          On February 29, 2000, five former shareholders of Antarctica who had
exercised appraisal rights under the Antarctica conversion jointly filed a
lawsuit against us and Antarctica in the 18th Civil Court of the City of Sao
Paulo. These former shareholders claim that the decision taken at the
Antarctica shareholders' meeting held on September 2, 1999, changing the
valuation method for determining the value of the Antarctica shares subject to
appraisal rights from the book value to economic value of such shares was
invalid, because it occurred after the plaintiffs had exercised their
appraisal rights. These plaintiffs claim compensation in the total amount of
approximately R$0.8 million (the current debt amount is R$1.1 million). On
July 21, 2001, the court dismissed the action against Antarctica. On December
21,


                                     136
<PAGE>


2001 the judge adjudicated in favor of the minority shareholders requiring
us to pay the difference between the value of the shares. We have appealed
this ruling and expect to prevail in the court of appeals based upon advice
from our external counsel. Based upon this expectation, we have not made a
provision for any amount.

          A court in the city of Sao Paulo, state of Sao Paulo, has restricted
AmBev from advertising soft drinks on television during the hours that
children's programming airs and imposed information requirements on our
advertisements, labels and containers informing consumers about the damages
that excessive sugar could bring to health as well as the risk of obesity. We
have appealed the restrictions and requirements and are pending decision by
the superior court. On May 18, 2004, another lawsuit was filed against AmBev
in a court in the city of Ribeirao Preto, state of Sao Paulo, to impose
similar restrictions and requirements. We are currently drafting a response to
such law suit. We expect to prevail in both the supreme court and the court in
the city of Ribeirao Preto based upon advice from our external counsel. Based
upon this expectation, we have not made a provision for any amount.

          OPTIONS AND WARRANTS

          In 2002, AmBev decided to request a ruling from the CVM in
connection with a dispute between AmBev and some of its warrant holders
regarding the criteria used in the calculation of the strike price of certain
AmBev warrants. See "Major Shareholders--Options and Warrants". On April 17,
2003, the CVM ruled that the criteria used by AmBev to calculate the strike
price was correct. In response to the CVM's final decision, some of the
warrant holders filed separate lawsuits before the courts of Sao Paulo and Rio
de Janeiro seeking to reverse the CVM's decision.

          Although the warrants expired without being exercised, the warrant
holders claim that the strike price should be reduced to take into account the
strike price of certain rights granted by AmBev to its officers and employees
since 1996 to acquire shares of AmBev, as well as for the strike price of
other stock purchase warrants issued in 1993. The warrant holders requested
preliminary injunctions for: (1) the immediate issuance by AmBev of the shares
corresponding to the total amount of warrants held by the plaintiffs; and (2)
the right to subscribe for these shares at the substantially lower
subscription price described above.

          Although the lower courts have granted preliminary injunctions to
the plaintiffs in most cases, those decisions have been reversed by the Courts
of Appeals of the states of Sao Paulo and Rio de Janeiro. Based on advice from
our external counsel, we believe that we have a good chance of prevailing in
these proceedings. Because the dispute is based on whether we should receive,
as a subscription price, a lower price or the price that we consider adequate,
without any contingent liability (except for legal fees), a provision of
amounts with respect to these proceedings is not applicable.

          Currently, we have been notified of six proceedings and 11 holders
claiming such rights and we estimate that the aggregate subscription price of
all the shares will be R$1,022.4 million based on a strike price of R$0.90977
for preferred shares and R$0.91595 for voting shares. One of the warrant
holders argues that the strike price thereof should be R$0.13581. The maximum
dilution for the existing shareholders would be the difference between these
values. AmBev has filed counterclaims on these lawsuits.

          TAX MATTERS

          AmBev has filed claims against the Brazilian tax authorities
alleging that certain taxes are unconstitutional. These legal tax proceedings
include claims for income taxes, the value added tax (ICMS), the excise tax
(IPI) and revenue taxes (PIS and COFINS). As these claims are contingent on
obtaining favorable judicial decisions, the corresponding assets which might
arise in the future are only recorded once it becomes certain that we will
receive the amounts previously paid or deposited.


                                     137


<PAGE>


As of March 31, 2004, we had approximately 21,424 tax claims
pending, including judicial proceedings and administrative investigations.
Most of these claims relate to ICMS and IPI. We have made provisions of
R$940.6 million in connection with these tax proceedings for which we believe
there is a probable chance of loss.

          INCOME TAX AND SOCIAL CONTRIBUTION

          Beginning in 1997, an amendment to the tax law confirmed the
deductibility of interest attributable to shareholders' equity for social
contribution and income tax purposes. Brahma filed a lawsuit with the 22nd
Federal Court of Rio de Janeiro requesting the recovery of social contribution
taxes previously paid for the fiscal year of 1996 in the amount of R$20.1
million. The Federal Court granted Brahma an injunction recognizing the
deductibility of payment of interest attributable to shareholders' equity and,
as a result, allowed Brahma to suspend the payment of social contribution
amounts owed in 1999 up to the amount not deducted in 1996, thereby allowing
Brahma to offset the amounts of taxes unduly paid in 1996 against the amounts
owed in 1999. In April 2001, the Federal Court of Appeals reversed the Federal
Court's injunction. On April 3, 2002, we appealed the Federal Court of
Appeal's judgment to the Brazilian Supreme Court and to the Superior Court of
Justice.

          VALUE-ADDED TAX, EXCISE TAX AND TAXES ON NET SALES

          In October 1996, a tax law allowed credits of ICMS on capital
expenditures to be offset against the amounts payable on such tax. Based on
this law and on certain constitutional principles, some of our subsidiaries
filed several lawsuits with State Courts to allow them to offset ICMS tax paid
prior to 1996 and with IPI excise tax paid in the 1997 against similar taxes
payable in 1996. We made a provision regarding the amounts offset, including
the interest and penalties that could become payable should we lose these
lawsuits.

          During 1999, a new law came into effect requiring Brazilian
companies to pay PIS and COFINS not only on sales and services net sales, but
also on financial income. We have not been paying PIS and COFINS as required
by the new law, as we have obtained injunctions permitting the non-payment of
these additional taxes on the basis that the new law is unconstitutional. As
such new taxes remain in force until a final ruling is rendered, we recorded
the accumulated amount of R$355,9 million as "provisions for contingencies and
other" as of March 31, 2004. We will not be permanently relieved of the
obligation to pay such taxes unless and until a final favorable ruling is
rendered.

          Before December 2002, in compliance with Law 10,637/02, the
federally levied PIS and COFINS taxes were charged over gross revenues with
two rates of 0.65% and 3.00%, respectively. Since December 2002, a new PIS
taxation mechanism has been implemented. As a result, PIS is now charged as a
value added tax, increasing its tax rate from 0.65 to 1.65%. According
to this new taxation mechanism, taxpayers may recognize PIS credits
corresponding to 1.65% over certain costs and expenses. Those credits can be
used to reduce the PIS due on the Company taxable revenues.

          Similarly, in December 2003, in compliance with the Law 10,833/03,
the same taxation mechanism was implemented for COFINS taxation. This law
increased the tax rate for COFINS from 3.00 to 7.60%, and the recognition of
tax credits corresponding to 7.60% over certain costs and expenses was granted
to Companies. The mentioned law also determined a specific PIS/COFINS taxation
on soda, water and beer, in which producers are responsible for the whole
chain of PIS/COFINS collection (monophase taxation). As we adopted the special
regime for PIS/COFINS, the following new tax rates are applicable:
<TABLE>
<CAPTION>
<S>       <C>
          o    BEER: PIS=R$0.0202/liter and COFINS=R$0.0935/liter
               ----

          o    CARBONATED SOFT DRINKS AND WATER: PIS=R$0.0117/liter and COFINS=R$0.0539/liter
               --------------------------------
</TABLE>


                                     138
<PAGE>


          Certain Brazilian taxpayers are prosecuting claims to be able to
exclude for the period from 1988 to 1995, in the calculation basis (i.e., the
gross revenue of the sixth previous month) the indexation for inflation prior
to the calculation of the PIS tax. The taxpayers argue that Complementary Law
7/70 does not require indexation of the calculation basis, and the provision
in the Decree laws, which created indexation of the calculation basis, was
overturned by the Federal Supreme Court and the Senate. The tax authorities
asserted that the Federal Supreme Court and Senate actions affected only the
determination of the calculation basis, but did not affect the definition of
the indexation procedure in the Decree Laws.

          On May 29, 2001 (ruling published on June 11, 2001) an arbitration
session of the Court of Appeals ruled in favor of the taxpayer. In the
administrative system, the decisions have been favorable to the taxpayers, and
the tax authorities are no longer issuing new infraction notices regarding
this issue. Although the issue has not yet received a final ruling, the
taxpayers described in the immediate preceding paragraph are likely to
prevail.

          On October 15, 2001, we concluded the preliminary determination of
the credits arising in the five year prescriptive period prior to the date of
our claim. The provision for the PIS liability, including interest and
charges, totaling R$138.7 million was reversed to income and recorded in
"Value added and excise taxes on sales" during 2001 and we are currently
awaiting a final decision.

          DISTRIBUTORS AND PRODUCT-RELATED CLAIMS

          Numerous breach of contract claims have been filed against CBB by
former distributors of Brahma and Antarctica whose contracts were terminated
due to low sales volume, failure by distributors to meet our guidelines and a
general rationalization of the distribution network. Most claims are still
under review by the lower level courts, in some we have appealed and are now
in intermediate court levels, and a few are currently being reviewed by the
highest level Court of Appeals in Brazil, the Supreme Court of Justice.
Additionally, former Antarctica distributors, among a few other distributors,
have filed breach of contract claims against us. These distributors either
seek to amend or modify certain terms and conditions of their distribution
agreement or allege we have breached the contracts. Notwithstanding, the
agreements continue to be in full force and effect and continue to be
performed regardless of any court proceedings.

          The aggregate amount of these claims is R$425.4 million. AmBev has
established provisions in the amount of R$19.1 million in connection with
these claims as of March 31, 2004, based on the advice of outside legal
counsel. We intend to continue a program of increasing our direct distribution
and, in areas where we continue to use third party distributors, may terminate
existing distributors in favor of new distributors. We expect this program to
result in additional lawsuits.

          There are currently eleven administrative proceedings against CBB
under CADE's review, each of them commenced by former or present distributors
who challenge the legality of market practices of CBB under distribution
arrangements and request the suspension of such market practices. CADE has
dismissed ten of those complaints, concluding that CBB did not engage in any
of the alleged illegal activities. The remaining one proceeding is still under
review by CADE.

          ANTITRUST MATTERS

9         THE COMBINATION

          We currently have six antitrust investigations pending against us,
which have been initiated by CADE following its investigations in connection
with the combination.

          The first proceeding refers to complaints brought by the Brazilian
Association of Antarctica Distributors (ABRADISA), alleging that provisions in
our distribution agreements are illegal exclusivity provisions. After
appropriate investigations, on February 22, 2002, the antitrust authorities
(Secretaria de


                                     139
<PAGE>


Direito Economico-SDE) decided to accept the proceedings against us to
determine whether there is circumstantial evidence relating to unfair market
practices. The antitrust authorities are seeking to determine whether or not
the following main practices are taking place: (i) establishment of minimum
quotas for retailers to purchase our beverages; (ii) imposition of sale price
to retailers; (iii) whether the share of the distribution network among
Antarctica, Skol and Brahma products has resulted in damages to retailers'
fair competition; (iv) unjustified increase in price; and (v) unfair
competition between retailers and direct distribution. On March 29, 2002 we
filed our defense. Presently, this proceeding is awaiting dismissal by the SDE
as in March 2003 CBB and its forty-one distributors executed a Term of
Transaction (Termo de Transacao) that has been fully complied by all its
parties. On November 4, 2003 the ABRADISA President filed a petition in this
proceeding stating that the Term of Transaction has been fully complied by all
its parties and that ABRADISA has no interest to proceed with this proceeding.

          In 2002, a distributor in the state of Alagoas filed a petition
requesting the Department of Justice to investigate the fulfillment of the
terms of CADE's performance agreement. The Department of Justice requested
information from AmBev on July 16, 2002. On August 12, 2002, we presented our
defense. We expect the Department of Justice to withdraw the charges with no
further implication to AmBev. Based on the arguments presented before the
antitrust authorities on May 7, 2003 and on advice received from outside
counsel, we believe that we have a good chance of being successful in these
proceedings. Therefore, we have not made a provision for any amount.

          On April 24, 2003, Cervejaria Braumeister, a small brewer with which
we have executed an exclusivity agreement filed a complaint with the SDE
alleging that we have breached the antitrust performance agreement that we
have signed with CADE relating to the Brahma and Antarctica combination by
imposing exclusivity on them. On October 20, 2003 we presented our defense. We
expect this complaint to be dismissed as we have obtained a judicial opinion
in our favor.

          The Department of Justice in the state of Rio Grande do Sul filed
two proceedings in connection with the lay-off of employees in the beer plants
of Estrela and Montenegro. We have entered into a settlement agreement with
the Department of Justice in the proceeding related to the Estrela plant,
which has been judicially confirmed. We are still discussing a settlement with
the Department of Justice in the Montenegro proceeding.

          On February 13, 2004, the Labor Union of the Food and Beverages
Industry Workers ("Sindicato dos Trabalhadores nas Industrias de Alimentacao e
Bebidas") of the city of Jacarei, State of Sao Paulo, filed a proceeding with
CADE in connection with the lay-off of employees in our beer plant in Jacarei.
In this proceeding, this union alleges that we have breached our antitrust
performance agreement signed with CADE relating to the Brahma and Antarctica
combination under which we have committed to maintain the level of employment
in our plants. On June 14, 2004 we presented our defense. We expect this
proceeding to be dismissed as we have complied with all the provisions of the
mentioned antitrust performance agreement.

          On May 17, 2004 Schincariol, which is currently one of our largest
competitors, filed a complaint with the antitrust authorities (Secretaria de
Direito Economico-SDE) asking it to investigate the legality of our customer
loyalty program (Programa de Fidelidade). Our was created to benefit our loyal
retailers. SDE has not yet made any decision on this complaint. The standard
procedure is for SDE to launch a preliminary investigation.

          JOINT VENTURES AND ALLIANCES

          Brahma's joint ventures with Miller and Unilever Brasil Ltda., its
franchise agreement with PepsiCo and Skol's licensing agreement with Carlsberg
were all required to be submitted to CADE for


                                     140
<PAGE>


approval. See "--Joint Ventures and Strategic Alliances". In October 1998,
CADE approved the franchise agreement with PepsiCo International, Inc. In
early 1999, CADE approved Brahma's joint venture with Unilever Brasil Ltda.,
which resulted in the creation of Ice Tea do Brasil Ltda. Also in 1999, the
Skol licensing arrangement with Carlsberg was approved by CADE. Miller license
arrangement was approved in 1997.

          CADE is currently reviewing our cooperation with Souza Cruz S.A. for
the implementation of "Cportal", a business to business website. On November
28, 2001, CADE unconditionally approved the cooperation with Souza Cruz S.A.
regarding the implementation of Agrega, a business-to-business website,
through which the acquisition of MRO (materials, repairs and operation)
products and services would be negotiated. The Agrega joint venture was
commenced on November 30, 2000. On April 8, 2003, the Public Attorney of CADE
issued an opinion favorable to the approval of this cooperation, together with
some recommendations. Currently we are awaiting CADE's decision on this
matter.

          As a result of PepsiCo's acquisition of Gatorade and subsequent
licensing of the trademark to us, CADE began analyzing the isotonic market
concentration. The company has agreed to keep all the labor positions related
to Gatorade production, while the marketing policies for Gatorade and Marathon
will be maintained independently. The company has also agreed not to reveal
the secrets regarding the production. Two CADE members have voted for the
approval of the transaction with restrictions, including the sale of Marathon.
We are awaiting CADE's final approval.

          On July 23, 2003, CADE approved with no restrictions our agreement
with Quinsa to distribute Quinsa beer in Brazil. This agreement is pending the
approval of Argentinean antitrust authorities as it also provides for the
distribution of Brahma in Argentina.

          INTERBREW-AMBEV TRANSACTIONS

          Currently CADE is reviewing our Act of Concentration (Ato de
Concentracao) relating to the Interbrew-AmBev Transactions. On March 18, 2004,
we formally notified the Brazilian antitrust authorities of the proposed
Interbrew-AmBev Transactions. On May 27, 2004, the SAE, an office within the
Ministry of Finance and one of the three bodies responsible for reviewing the
transaction, issued an opinion recommending approval, without restriction, on
the basis that the transactions would not affect the domestic beer market.
Schincariol filed an opposition to the transaction that has been rejected by
the SAE. On June 29, 2004, SDE issued an opinion concurring in SAE's
recommendation that the transaction be approved without restriction. The
transactions have been submitted to CADE, the ultimate Brazilian antitrust
authority, for a final decision. While we believe that the proposed
Interbrew-Ambev Transactions do not raise concerns with respect to competition
within Brazil, we cannot assure you that the Brazilian antitrust authorities
will approve the transactions or that the Brazilian antitrust authorities will
not impose retrictions or conditions in connection with their approval if
granted.



          CANADIAN REGULATORY APPROVAL

          Competition Act

          On March 30, 2004, the Canadian Commissioner of Competition (the
"Commissioner") issued an advanced ruling certificate ("ARC") with respect to
the Interbrew Ambev Transactions, exempting the transactions from the
pre-merger filing provisions of the Competition Act of Canada. In addition, if
the transactions are substantially completed within one year after the ARC is
issued, the Commissioner cannot seek an order enjoining or rescinding the
transactions.

                                     141
<PAGE>



          Investment Canada Act

          The parties have determined that the Interbrew-AmBev Transactions
are not subject to review or approval under the Investment Canada Act. The
parties intend to file a notice of investment as required under the Investment
Canada Act within 30 days after the closing date.

          E.U. REGULATORY APPROVALS

          On March 31, 2004, the German Federal Cartel Office approved the
merger filing made by AmBev. Other than the filing in Germany, the
Interbrew-AmBev Transactions will not require notification under the European
Community Merger Regulation.

          CVM

          Caixa de Previdencia dos Funcionarios do Banco do Brasil - PREVI, a
Brazilian pension fund holding approximately 8.98% of AmBev's capital stock,
filed an administrative complaint against AmBev with the CVM on April 8, 2004,
alleging abuse of position by AmBev's controlling shareholders and breach of
fiduciary duty by AmBev's directors in connection with the approval of the
Interbrew-AmBev Transactions. The complaint requests, among other things, that
CVM render an opinion contesting the legality of the transaction and intervene
to prevent the closing of the Incorporacao. On May 4, 2004, AmBev filed a
response to the complaint with the CVM, which was supported by three opinions
of renown Brazilian legal scholars. The complaint is still being reviewed by
the CVM and we do not know when the CVM will conclude its review. A decision
pending on such complaint does not, however, prevent the consummation of the
Interbrew-AmBev Transactions.

          Following the announcement of the Interbrew-AmBev Transactions, we
were notified by the CVM that it detected what it perceived to be unusual
trading patterns in shares of AmBev in the weeks preceding the announcement.
The CVM, in accordance with what we understand to be its standard procedures,
requested from us and from Braco S.A. a list of all directors, officers,
employees, accountants, lawyers, investment bankers and other consultants
involved in the Interbrew-AmBev Transactions. That information has been
supplied to the CVM. According to certain public statements of staff members
and commissioners of the CVM, the CVM is investigating the possibility that
the trading of AmBev shares based on non-public information occurred. We
believe that CVM's investigation is pending; however, we have no indication of
when the investigation will conclude.

          LABOR MATTERS

          We are involved in approximately 9,500 legal proceedings with former
and current employees, mainly relating to dismissals, severance, overtime,
health and safety premiums, supplementary retirement benefits and other
matters, all of which are awaiting judicial resolution.

          We have established provisions in the amount of R$204.7 million as
of March 31, 2004, in connection with all labor proceedings in which we
believe there is a probable chance of loss. In Brazil, it is not unusual for a
company to be a defendant in a large number of labor claims.

          In compliance with CADE's decision approving the controlling
shareholders' contribution and the performance agreement that we entered into
with CADE, any dismissals must be made in accordance with the restrictions
imposed by the decision. See "Background on the Company-Brazilian Antitrust
Approval". We are involved in some lawsuits filed by dismissed employees
claiming reinstatement in view of the CADE decision.


                                     142
<PAGE>


          ENVIRONMENTAL MATTERS

          On November 7, 2001, the District Attorney of Manaus (Promotoria)
notified us that a criminal lawsuit had been initiated against IBANN, our
subsidiary, and three of its officers in the district court of the State of
Manaus claiming damages for harm allegedly done to the Igarape dos Franceses
forest. On March 21, 2002, the district attorney proposed a settlement through
a series of environmental projects. On November 19, 2002 we entered into an
agreement with the District Attorney which included the reforestation of an
area of the Igarape dos Franceses forest and the purchase of equipment used by
the governmental agencies to protect the environment. We have complied with
all the terms of the agreement which will be homologated at a judicial hearing
which has yet to be scheduled.

          On February 5, 2002, we entered into a performance agreement with
the Brazilian Department of Justice in order to promote the rehabilitation of
"the Fazenda Campos". Under this agreement we are supposed to clean and
reforest this area until the end of November, 2003. At that time, the
Brazilian Department of Justice will issue a legal opinion. We have already
cleaned and reforested the land, and currently we are monitoring the growth of
the forest.

          In August 2003, the company Oliveira Comercio de Sucatas filed a
complaint with the District Attorney of the city of Pedreira, in the State of
Sao Paulo, alleging that CBB is using the waste disposal site of the city as a
disposal for toxic garbage. In September 2003, we presented our response and
have performed all the necessary studies which allowed us to conclude that CBB
has not disposed any toxic garbage there were no actions causing harm to the
environment. We are awaiting a Judicial Power decision on this matter. Based
on the results of our studies, as well as the retaliatory nature of Oliveira
Comercio de Sucatas' complaint filed immediately following a termination of a
service contract, we believe CBB will be cleared.

          The District Attorney in charge of protecting the environment in the
State of Rio de Janeiro has requested the initiation of a civil investigation
to investigate anonymous reports of the pollution allegedly caused by Nova
Rio, AmBev's beer plant located in the city of Rio de Janeiro in the State of
Rio de Janeiro. Currently this investigation is under the phase of collection
of information. We expect this investigation to be dismissed as we have
presented several expert opinions, including the one from the State
environmental agency (FEEMA) which shows the non existence of environmental
damages. Due to the wide repercussion of this matter in the media, the
Legislative Power initiated a Parliamentary Commission of Investigation
(Comissao Parlamentar de Inquerito-CPI) to investigate the facts. Our
corporate relations officer, Milton Seligman, has testified in a public
hearing related to this matter. We expect the CPI to be dismissed as we
presented expert opinions showing the non-existence of any environmental
damages by our Nova Rio beer plant.

          In the first quarter of 2003, we proposed a draft of a performance
agreement establishing "Policies of Odors Emission" to the Brazilian
Department of Justice and Brazilian Environmental Authorities. Until May 2004,
no legal opinion was issued by the Brazilian Department of Justice or by the
Environmental Authorities.

          DIVIDEND POLICY

          For information regarding our dividend policy, see "Key
Information--Selected Financial Data--Dividends--Dividend Policy".

          SIGNIFICANT CHANGES

          Except as otherwise described in our annual financial statements and
the Interbrew-AmBev Transactions, there have been no significant changes in
our business, financial conditions or results since December 31, 2003.


                                     143
<PAGE>


The Offer and Listing


             PRINCIPAL MARKET AND TRADING MARKET PRICE INFORMATION

          AmBev is registered as a publicly held company with the CVM and has
been listed on the Brazilian stock exchanges since December 17, 1998, under
the name of Aditus Participacoes S.A. Because AmBev was originally
incorporated as a shelf company without any operational activity, there was no
market for AmBev shares until September 17, 1999, two business days after the
Antarctica conversion. From September 17, 1999 until September 15, 2000, the
first date following the Brahma conversion, there was a limited trading market
for AmBev shares. For a description of the combination transactions that led
to the formation of AmBev, including the Antarctica and Brahma conversions,
see "The Combination and Antitrust Approval". AmBev shares are quoted on the
Sao Paulo Stock Exchange under the symbols "AMBV3" (common shares) and "AMBV4"
(preferred shares). Until April 28, 2000, the AmBev shares were traded in the
Rio de Janeiro Stock Exchange and other Brazilian stock exchanges under the
symbols "AMBVON" (common shares) and "AMBVPN" (preferred shares).

          On October 20, 2000, the shareholders of AmBev present at an
extraordinary general meeting unanimously approved a five-for-one stock split
of the company's outstanding common and preferred shares. See note 15(a)(ii)
in the consolidated financial statements.

SHARES

          The table below shows the quoted high and low closing sales prices
in reais on the Sao Paulo Stock Exchange for AmBev's preferred and common
shares for the indicated periods. All prices quoted below relating to periods
prior to September 15, 2000, relate to high and low closing sales prices in
reais on the Sao Paulo Stock Exchange for preferred and common shares of
Brahma, AmBev's predecessor. All share prices, including prices relating to
Brahma preferred and common shares, have been restated to reflect AmBev's
five-for-one stock split described in the preceding paragraph.



                                     144
<PAGE>


      TRADING PRICES ON THE SAO PAULO STOCK EXCHANGE: PREFERRED SHARES(1)
      -------------------------------------------------------------------
                                       PER 1,000 PREFERRED SHARES
                                    -------------------------------
                                        HIGH                 LOW
                                    ------------         ----------
                                               (in reais)
ANNUAL
-----------------------------
2003.........................         R$739               R$474
2002.........................           550                 391
2001.........................           581                 406
2000.........................           488                 208
1999.........................           272                  92
1998.........................           176                  78

QUARTERLY
-----------------------------
2003
   First Quarter.............         R$562               R$474
   Second Quarter............           613                 543
   Third Quarter.............           703                 563
   Fourth Quarter............           739                 600
2002
   First Quarter.............         R$500               R$437
   Second Quarter............           497                 398
   Third Quarter.............           460                 391
   Fourth Quarter............           550                 421

MONTHLY
-----------------------------
2003
   January...................         R$545               R$474
   February..................           515                 479
   March.....................           562                 491
   April.....................           584                 543
   May.......................           613                 588
   June......................           600                 580
   July......................           604                 586
   August....................           655                 563
   September.................           703                 608
   October...................           660                 613
   November..................           700                 600
   December..................           739                 659

Source:  Bloomberg

(1)  For a period of time commencing on September 17, 1999, two business days
     after the Antarctica conversion, and prior to September 15, 2000, the
     first date following the Brahma conversion, there did exist two separate
     trading markets for the shares of AmBev and Brahma, AmBev's predecessor.
     Due to the limited trading volume in AmBev's shares throughout this
     period, however, this chart only relates to the stock prices of Brahma
     shares for the period of time commencing on September 17, 1999 and prior
     to September 15, 2000.


                                     145
<PAGE>


      TRADING PRICES ON THE SAO PAULO STOCK EXCHANGE: COMMON SHARES(1)
      ----------------------------------------------------------------
                                       PER 1,000 COMMON SHARES
                                    -----------------------------
                                        HIGH                LOW
                                    ------------        -----------
                                               (in reais)
ANNUAL
2003.........................         R$640               R$415
2002.........................           489                 355
2001.........................           540                 350
2000.........................           470                 158
1999.........................           190                  92
1998.........................           160                  77

QUARTERLY
2003
   First Quarter.............         R$480               R$415
   Second Quarter............           540                 470
   Third Quarter.............           630                 484
   Fourth Quarter............           640                 550
2002
   First Quarter.............         R$445               R$385
   Second Quarter............           420                 355
   Third Quarter.............           410                 360
   Fourth Quarter............           489                 385

MONTHLY
2003
   January...................         R$470               R$415
   February..................           450                 420
   March.....................           480                 425
   April.....................           505                 470
   May.......................           540                 515
   June......................           530                 500
   July......................           520                 500
   August....................           560                 484
   September.................           630                 570
   October...................           620                 550
   November..................           627                 560
   December..................           640                 595

Source:  Bloomberg

(1)  For a period of time commencing September 17, 1999, two business days
     after the Antarctica conversion, and prior to September 15, 2000, the
     first date following the Brahma conversion, two separate trading markets
     existed for the shares of AmBev and Brahma, AmBev's predecessor. Due to
     the limited trading volume in AmBev's shares throughout this period,
     however, this chart only relates to the stock prices of Brahma shares for
     the period of time commencing September 17, 1999 and prior to September
     15, 2000.


                                     146
<PAGE>


ADRS

          AmBev has registered two classes of American Depositary Shares
(ADSs) pursuant to the Securities Exchange Act: ADSs evidenced by American
Depositary Receipts (ADRs) representing 100 preferred shares, and ADSs
evidenced by ADRs representing 100 common shares. The ADSs have been listed on
the New York Stock Exchange since September 15, 2000 and trade under the
symbols "ABV.c" (ADSs representing AmBev common shares) and "ABV" (ADSs
representing AmBev preferred shares). On October 20, 2000, the shareholders
present at an extraordinary general meeting unanimously approved a
five-for-one stock split of the company's outstanding common and preferred
shares. However, AmBev's ADSs were not split. Prior to the stock split, each
ADS represented 20 common or preferred shares of AmBev. Since the stock split
did not affect AmBev's ADSs, after the stock split each ADS represented 100
common or preferred shares of AmBev. Consequently, the stock split did not
have a significant impact on the price of our ADRs.

          As of May 31, 2004, there were 19 registered holders of our
preferred ADSs, with approximately 99.9% of the preferred ADSs registered in
the name of The Depository Trust Company. As of May 31, 2004, there were 12
registered holders of the common ADSs, with approximately 99.9% of the ADSs
registered in the name of The Depository Trust Company.

          The information presented in the table below represents, for the
indicated periods, the reported high and low closing sales prices of AmBev
ADRs quoted in U.S. dollars on the New York Stock Exchange. All prices quoted
below relating to periods prior to September 15, 2000, relate to the reported
high and low closing sales prices of the ADRs of Brahma, AmBev's predecessor,
quoted in dollars on the New York Stock Exchange.


                                     147
<PAGE>


                TRADING PRICES ON THE NEW YORK STOCK EXCHANGE:
                  ADRS REPRESENTING 100 PREFERRED SHARES(1)
                ----------------------------------------------
                                            PER 100 PREFERRED SHARE ADRS
                                            ----------------------------
                                              HIGH                 LOW
                                            --------              ------
                                                      (in U.S.$)
ANNUAL
-----------------------------
2003.........................              U.S.$25.51           U.S.$13.00
2002.........................                   21.49                10.70
2001.........................                   28.70                14.20
2000.........................                   25.50                11.81
1999.........................                   14.50                 7.00
1998.........................                   15.56                 6.63

QUARTERLY
-----------------------------
2003
   First Quarter.............              U.S.$16.61           U.S.$13.00
   Second Quarter............                   21.31                17.15
   Third Quarter.............                   24.06                18.18
   Fourth Quarter............                   25.51                21.02
2002
   First Quarter.............              U.S.$21.49           U.S.$18.30
   Second Quarter............                   21.30                14.21
   Third Quarter.............                   16.05                10.72
   Fourth Quarter............                   15.56                10.70

MONTHLY
-----------------------------
2003
   January...................              U.S.$16.61           U.S.$13.00
   February..................                   14.42                13.20
   March.....................                   16.61                13.75
   April.....................                   19.99                17.15
   May.......................                   21.31                19.50
   June......................                   20.97                19.59
   July......................                   21.23                19.85
   August....................                   22.19                18.18
   September.................                   24.06                20.60
   October...................                   23.05                21.20
   November..................                   24.07                21.02
   December..................                   25.51                22.50

Source: The Bank of New York

(1)  For a period of time commencing on September 17, 1999, two business days
     after the Antarctica conversion, and prior to September 15, 2000, the
     first date following the Brahma conversion, there did exist two separate
     trading markets for the shares of AmBev and Brahma, AmBev's predecessor.
     Due to the limited trading volume in AmBev's shares throughout this
     period, however, this chart only relates to the stock prices of Brahma
     shares for the period of time commencing on September 17, 1999 and prior
     to September 15, 2000.


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<PAGE>


                TRADING PRICES ON THE NEW YORK STOCK EXCHANGE:
                    ADRS REPRESENTING 100 COMMON SHARES(1)
                ----------------------------------------------
                                    PER 100 COMMON SHARE ADRS
                                ----------------------------------
                                     HIGH                 LOW
                                --------------        -----------
                                             (in U.S.$)
ANNUAL
2003.........................    U.S.$22.00           U.S.$10.00
2002.........................         18.75                10.18
2001.........................         26.00                10.00
2000.........................         19.88                 9.00
1999.........................         10.25                 7.31
1998.........................         13.75                 6.63

QUARTERLY
2003
   First Quarter.............    U.S.$14.11           U.S.$10.00
   Second Quarter............         18.10                10.00
   Third Quarter.............         19.00                14.00
   Fourth Quarter............         22.00                15.00
2002
   First Quarter.............    U.S.$18.75           U.S.$15.50
   Second Quarter............         17.50                14.00
   Third Quarter.............         14.30                12.50
   Fourth Quarter............         13.50                10.18

MONTHLY
2003
   January...................    U.S.$14.08           U.S.$11.47
   February..................         13.00                11.73
   March.....................         14.11                10.00
   April.....................         16.10                10.00
   May.......................         17.20                15.00
   June......................         18.10                15.00
   July......................         17.59                15.00
   August....................         18.91                14.00
   September.................         19.00                15.00
   October...................         21.39                15.00
   November..................         21.46                17.00
   December..................         22.00                17.00

Source: The Bank of New York

(1)  For a period of time commencing on September 17, 1999, two business days
     after the Antarctica conversion, and prior to September 15, 2000, the
     first date following the Brahma conversion, there did exist two separate
     trading markets for the shares of AmBev and Brahma, AmBev's predecessor.
     Due to the limited trading volume in AmBev's shares throughout this
     period, however, this chart only relates to the stock prices of Brahma
     shares for the period of time commencing on September 17, 1999 and prior
     to September 15, 2000.


                                     149
<PAGE>


                 REGULATION OF THE BRAZILIAN SECURITIES MARKET

          The Brazilian securities markets are regulated by the CVM, which has
general authority over the stock exchanges and securities markets, as well as
by the Central Bank, which has, among other powers, licensing authority over
brokerage firms and regulates foreign investment and foreign exchange
transactions. The Brazilian securities markets are governed by Law No. 6,385
dated December 7, 1976 (the "Brazilian Securities Law"), and by Law No. 6,404
of December 15, 1976 (the "Brazilian Corporate Law"), which were amended and
supplemented by Law No. 10,198/01, dated February 14, 2001, Law No. 10,303/01,
dated October 31, 2001, and Law No. 10,411/02, dated February 26, 2002, which
introduced new concepts and several changes, and by regulations issued by the
CVM, the Conselho Monetario Nacional (National Monetary Council) and the
Central Bank. These laws and regulations, among others, provide for disclosure
requirements, restrictions on insider trading and price manipulation, and
protection of minority shareholders. They also provide for licensing and
oversight of brokerage firms and governance of Brazilian stock exchanges.
However, the Brazilian securities markets are not as highly regulated and
supervised as U.S. securities markets.

          Under Brazilian Corporate Law, a company is either publicly held
(listed), a companhia aberta, such as AmBev, whose shares are publicly traded
on the Sao Paulo Stock Exchange (Bovespa), or privately held (unlisted), a
companhia fechada. All listed companies are registered with the CVM and are
subject to reporting and regulatory requirements. The Brazilian Corporate Law
allows the CVM to classify listed companies according to the kind of
securities they issue. A company registered with the CVM may trade its
securities either on the Brazilian stock exchanges or in the Brazilian
over-the-counter market. Shares of companies like AmBev traded on the Sao
Paulo Stock Exchange may not also be traded on the Brazilian over-the-counter
market. The shares of a listed company, including AmBev, may also be traded
privately subject to several limitations. To be listed on the Sao Paulo Stock
Exchange a company must apply for registration with the CVM.

          The trading of securities on the Brazilian stock exchanges may be
halted at the request of a company in anticipation of a material announcement.
Companies are sometimes required by law to request such suspension. Trading
may also be suspended on the initiative of a Brazilian stock exchange or the
CVM, among other reasons, based on or due to a belief that a company has
provided inadequate information regarding a significant event or has provided
inadequate responses to inquiries by the CVM or a stock exchange.

TRADING ON THE BRAZILIAN STOCK EXCHANGES

          On January 27, 2000, a formal protocol was signed merging the
previous nine Brazilian stock exchanges. Following the merger, the Sao Paulo
Stock Exchange is the only Brazilian stock exchange on which private equity
and private debt may be traded. The Sao Paulo Stock Exchange is a
not-for-profit entity owned by its member brokerage firms. Trading on the Sao
Paulo Stock Exchange is limited to member brokerage firms and a limited number
of authorized non-members.

          The Sao Paulo Stock Exchange outcry trading sessions are from 10:00
a.m. to 1:00 p.m. and from 2:00 p.m. to 4:45 p.m., subject to change during
daylight savings time in the United States. There is also an on-line Sao Paulo
Stock Exchange Trading System called Mega Bolsa which trades all stocks that
are not traded in the floor, the simultaneously trade of some stocks being
permitted (from 10:00 a.m. to 5 p.m. and from 4:45 p.m. to 5:00 p.m. there is
a closing call). The Sao Paulo Stock Exchange also permits trading from 5:45
p.m. to 7:00 p.m. on an


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<PAGE>


on-line system connected to traditional and Internet brokers called the After
Market. The After Market session is restricted to certain stocks that were
traded in the floor during the outcry session demonstrating certain liquidity
characteristics. Trading on the After Market is subject to regulatory limits
on price volatility and on the volume of shares transacted through Internet
brokers. CVM has discretionary authority to suspend trading in shares of a
particular issuer under specific circumstances. Securities listed on the Sao
Paulo Stock Exchange may also be traded off the exchange under specific
circumstances, but such trading is very limited.

          Settlement of transactions is effected three business days after the
trade date. Delivery of and payment for shares are made through the facilities
of separate clearing houses for each exchange, which maintain accounts for the
member brokerage firms. The seller is ordinarily required to deliver the
shares to the exchange on the second business day following the trade date.
The clearing house for the Sao Paulo Stock Exchange is Companhia Brasileira de
Liquidacao e Custodia (CBLC), which is owned by the Sao Paulo Stock Exchange
and its members.

          In order to better control volatility, the Sao Paulo Stock Exchange
has adopted a "circuit breaker" mechanism pursuant to which trading sessions
may be suspended for a period of 30 minutes whenever the index of the stock
exchange falls 10% compared to the previous day's closing index. After that,
if the market falls more 5%, the Circuit Breaker is triggered again for one
more hour. If the market falls more than 15% compared to the previous day no
more pauses are taken. The "circuit breaker" is not allowed to be started
during the last 30 minutes of the trading session (from 4:15p.m. to 4:45
p.m.).

          Although the Brazilian equity market is Latin America's largest in
terms of market capitalization, it is smaller, more volatile and less liquid
than the major U.S. and European securities markets. At December 31, 2002, the
aggregate market capitalization of all the companies listed on Sao Paulo Stock
Exchange was equivalent to approximately R$ 438 billion. Although all of the
outstanding shares of a listed company are actually available for trading by
the public, in most cases fewer than half of the listed shares are actually
traded by the public because the remainder of a listed company's shares are
usually held by small groups of controlling persons, by governmental entities
or by one principal shareholder. For this reason, data showing the total
market capitalization of Brazilian stock exchanges tend to overstate the
liquidity of the Brazilian equity securities market.

          There is also significantly greater concentration in the Brazilian
securities markets. During the year ended December 31, 2002, the ten most
actively traded issues represented approximately 55.77% of the total volume of
shares traded on the Sao Paulo Stock Exchange, comparable to the 53.47% of
total volume in 2001.

          Trading on Brazilian stock exchanges by non-residents of Brazil is
subject to limitations under Brazilian foreign investment legislation. See
"Key Information--Exchange Rate Information--Exchange Controls" and
"Additional Information--Memorandum and Articles of Association--Restrictions
on Foreign Investment".



                                     151
<PAGE>


Additional Information



                    MEMORANDUM AND ARTICLES OF ASSOCIATION

          Set forth below is a brief summary of the material provisions
concerning our preferred shares, common shares, bylaws and the Brazilian
Corporate Law. In Brazil, the principal governing document of a corporation is
the company's bylaws ("Estatuto Social"). This description is qualified in its
entirety by reference to Brazilian Corporate Law and our bylaws. An English
translation of our bylaws has been filed with the Securities and Exchange
Commission of the United States (SEC) as an exhibit to this annual report. A
copy of our bylaws (together with an English translation) is also available
for inspection at the principal office of the Depositary. Information on the
trading market for our preferred shares is set forth under "The Offer and
Listing-Principal Market and Trading Market Price Information" and information
on ownership of our shares is set forth under "Major Shareholders and Related
Party Transactions-Major Shareholders".

          Our capital stock is comprised of preferred shares and common
shares, all without par value. At May 31, 2004, there were 21,732,192,808
total preferred shares ("acoes preferenciais") outstanding and 15,631,332,792
total common shares ("acoes ordinarias") outstanding. We are authorized to
increase our capital upon the decision of our Board of Directors, without the
need to amend our bylaws, up to 45,000,000,000 shares, limited to
27,000,000,000 preferred shares and 18,000,000,000 common shares. There are no
other classes or series of preferred shares outstanding.

          Each AmBev common share entitles the holder thereof to one vote at
meetings of our shareholders. Holders of common shares are not entitled to any
preference relating to our dividends or other distributions or any preference
upon our liquidation.

          Each AmBev preferred share is non-voting, may not be converted into
a common share, and is entitled to:

          (i)  priority in the reimbursement of capital in case of company's
               liquidation; and

          (ii) the right to receive dividends in an amount per share at least
               10% higher than the amount per share paid to holders of common
               shares.

          See "Voting Rights" for more information regarding the voting rights
of our preferred shares.

          Although Law No. 10,303/01 has amended the Brazilian Corporate Law
to establish that the number of non-voting shares or shares with limited
voting rights, such as our preferred shares, may not exceed half (50%) of the
total number of issued shares, since AmBev has been incorporated prior to the
enactment of Law No. 10,303/01, it is allowed by law to keep the existing
proportion between common shares and preferred shares - i.e. the number of its
non-voting shares may not exceed two-thirds of the total number of its shares.

          The majority of members of our Board of Directors will be elected by
the controlling shareholders of our common shares. Board members, regardless
the shareholder they represent, owe fiduciary duties towards our Company and
all of our shareholders. At the same time, any director appointed by
shareholders bound by a shareholders' agreement is also bound by the


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<PAGE>


terms of such agreement. For further information on this matter see "Major
Shareholders and Related Party Transactions--AmBev's Shareholders Agreement".



          GENERAL

          Our registered name is Companhia de Bebidas das Americas - AmBev and
our registered office is in Sao Paulo, SP, Brazil. Our registration number
with the Brazilian Commercial Registry is 35,300,157,770. AmBev's principal
corporate purposes include the production and sale of beer, soft drinks and
other beverages. A more detailed description of AmBev's purposes can be found
in Chapter I, Article 3 of AmBev's bylaws.



          BOARD OF DIRECTORS

          According to the Brazilian Corporate Law, any matters subject to the
approval of the Board of Directors can be approved by a "simple majority" of
votes of the members present at the meeting, unless the company's bylaws
establish a higher quorum (which is not the case with respect to AmBev's
bylaws). Therefore, any matters requiring the approval of AmBev's Board of
Directors will be approved by the affirmative vote of a majority of its Board
members present at the relevant meeting.

          According to the general principles of the Brazilian Corporate Law,
if a director or an executive officer has a conflict of interest with the
company in connection with any proposed transaction, the director or executive
officer may not vote in any decision of the board of directors or of the board
of executive officers regarding such transaction and must disclose the nature
and extent of the conflicting interest for transcription in the minutes of the
meeting. In any case, a director or an executive officer may not transact any
business with the company, including any borrowings, except on reasonable or
fair terms and conditions that are identical to the terms and conditions
prevailing in the market or offered by third parties. Any transaction that a
director may have an interest in can only be approved if carried out on an
arm's-length basis.

          Our bylaws and the Brazilian Corporate Law require that our
directors be shareholders of the Company. Ownership of one share is sufficient
to satisfy this condition.



          DIVIDENDS AND RESERVES

          The discussion below summarizes the main provisions of the Brazilian
Corporate Law regarding the establishment of reserves by corporations and
rules with respect to the distribution of dividends, including provisions
regarding the interest charge attributed to shareholders' equity.

          Calculation of Distributable Amounts

     o    At each Annual Shareholders' meeting, AmBev's Board of Directors is
          required to propose how the company's net earnings for the preceding
          fiscal year are to be allocated. For purposes of Brazilian Corporate
          Law, a company's net income after income taxes and social
          contribution taxes for such fiscal year, net of any cumulated losses
          from prior fiscal years and amounts allocated to employees' and
          management's participation in earnings represents its "adjusted
          income" for such fiscal year. In accordance with the Brazilian
          Corporate Law, an amount equal to such "adjusted income" (which we
          will


                                     153


<PAGE>

          refer to as the "distributable amount") will be available for
          distribution to shareholders in any particular year. Such
          distributable amount is subject to:

     o    Reductions that may be caused by amounts contributed for the purpose
          of meeting the charges of the assistance foundation for employees
          and management of the Company and its controlled companies, with due
          regard for the rules established by the Board of Directors to this
          effect. Up to 10% of the distributable amount may be contributed
          under this concept.

     o    Reductions caused by amounts allocated to the "Legal Reserve" or
          contingency reserves. See "--Reserves".

     o    Increases caused by reversals of reserves constituted in prior
          years.

          Mandatory Dividend

          Under its bylaws, AmBev is required to distribute to shareholders as
dividends in respect to each fiscal year ending on December 31 an amount not
less than 35% of the distributable amount ("mandatory dividend"). In addition
to the mandatory dividend, the Board of Directors may recommend payment of
complimentary dividends to shareholders. The limit for dividend payment is the
distributable amount plus the balance available in our statutory "Investment
Reserve", in which we allocate distributable amounts from previous fiscal
years not paid as dividends. See "--Reserves". Furthermore, dividend payments
may be implemented in advance, during the fiscal year to which it is related,
upon decision of the Board of Directors. Any amount paid as dividend in
advance will be considered by the end of the fiscal year as part of the
mandatory dividend owed to shareholders.

          In addition, the mandatory dividend, either the full amount or a
portion of it, may not be paid in any given year should the Board of Directors
consider that such payment is incompatible with the company's financial
situation and the shareholders approve. While the law does not establish the
circumstances in which payment of the mandatory dividend is "incompatible"
with the company's financial situation, it is generally agreed that a company
is allowed not to pay the mandatory dividend if such payment threatens the
existence of the company as a going concern or harms its normal course of
operations. Company's fiscal committee ("Conselho Fiscal") must opine on the
non-payment of mandatory dividends, and AmBev's administration is supposed to
provide to the CVM, no later than 5 business days after such decision is
taken, a report explaining the reasons considered by the Board of Directors.

          Any postponed payment of mandatory dividends must be allocated as a
special reserve. Any remaining balance of such reserve not absorbed by losses
in subsequent fiscal years must be paid to shareholders as soon as the
company's financial allows for that.

          Dividend Preference of Preferred Shares

          Pursuant to AmBev's bylaws, AmBev's preferred shareholders, if any,
are entitled to dividends 10% greater than the dividends to be paid to its
common shareholders.


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<PAGE>


          Payment of Dividends

          Under Brazilian Corporate Law any holder of record of shares at the
time of a dividend declaration is entitled to receive dividends, which are
generally required to be paid within 60 days following the date of such
declaration, unless a shareholders' resolution sets forth another date of
payment, which, in either case, must occur prior to the end of the fiscal year
in which such dividends were declared. AmBev's bylaws do not provide for a
time frame for payment of dividends. The mandatory dividend is satisfied
through payments made in the form of dividends and interest attributable to
shareholders' equity, which is equivalent, from an economic perspective, to a
dividend, but is a more tax efficient way to distribute earnings for the
company, as it is generally deductible for income tax purposes. Shareholders
have a three-year period from the dividend payment date to claim the payment
of dividends in respect of its shares, after which the company has no
liability for such payment.

          Shareholders who are not residents of Brazil must register their
investment with the Central Bank in order for dividends, sales proceeds or
other amounts to be eligible for remittance in foreign currency outside of
Brazil. The preferred and common shares underlying our ADSs are held in Brazil
by the custodian (Banco Itau S.A.), as agent for the depositary (The Bank of
New York), which is the registered owner of AmBev shares. Payments of cash
dividends and distributions, if any, on AmBev common and preferred shares will
be made in Brazilian reais to the custodian on behalf of the depositary. The
custodian will then convert such proceeds into U.S. dollars and will deliver
such U.S. dollars to the depositary for distribution to the holders of AmBev
ADSs. In the event that the custodian is unable to immediately convert the
dividends in reais into U.S. dollars, holders of the preferred and common
AmBev ADSs may be adversely affected by devaluations or other exchange rate
fluctuations before such dividends can be converted and remitted. Fluctuations
in the exchange rate between the real and the U.S. dollar may also affect the
U.S. dollar equivalent of the real price of the preferred and common shares of
AmBev in the Brazilian stock exchange.

          Interest Attributable to Shareholders' Equity

          Pursuant to a change in Brazilian tax law effective January 1, 1996,
Brazilian companies are permitted to distribute earnings to shareholders under
the concept of Interest Attributable to Shareholder's Equity. The amounts paid
under this concept are deductible for income tax purposes and, as of the
beginning of 1998, they also became deductible for social contribution
purposes. The objective of the tax law change was to encourage the use of
equity investment, as opposed to debt, to finance corporate activities. The
amount of any such notional "interest" payment to holders of equity securities
is limited in respect of any particular year to the minimum of (a) 50% of
retained earnings plus any statutory earnings reserve or (b) the company's
Shareholder's Equity multiplied by the Taxa de Juros de Longo Prazo (TJLP),
which is the official interest rate used as reference in long-term loans
provided by the Brazilian Development Bank.

          Interest Attributable to Shareholder's Equity is treated exactly as
dividends for purposes of income distribution. The only significant difference
is that a 15% withholding tax is due by shareholders upon receipt of such
interest payment, which tax is collected by the company in behalf of its
shareholders when the distribution is implemented.

          The net amount shareholders receive as Interest Attributable to
Shareholder's Equity is deducted from the mandatory dividend owed to
shareholders.


                                     155


<PAGE>


          Reserves

          General
          -------

          Brazilian Corporate Law provides that all discretionary allocations
of "adjusted income", including the Unrealized Income Reserve and the
Investment Reserve, are subject to approval by shareholders and may be added
to capital or distributed as dividends in subsequent years. In the case of Tax
Incentive Reserve and the Legal Reserve, they are also subject to approval by
shareholders; however, the use of their respective balances is restricted to
being added to capital or the absorption of losses. They can not be used as a
source for income distribution to shareholders.

          Legal Reserve
          -------------

          Under Brazilian Corporate Law, corporations (such as AmBev) are
required to maintain a "Legal Reserve" to which they must allocate 5% of their
"adjusted income" for each fiscal year until the balance of the reserve equals
20% of their paid-in capital. Cumulated losses, if any, may be charged against
the Legal Reserve. Other than that, the Legal Reserve can only be used to
increase the company's capital.

          Contingency Reserve
          -------------------

          Under the Brazilian Corporate Law, a portion of our "adjusted
income" may also be discretionally allocated to a "contingency reserve" for an
anticipated loss that is deemed probable in future years. Any amount so
allocated in a prior year must be either reversed in the fiscal year in which
the loss was anticipated if such loss does not in fact occur or charged off in
the event that the anticipated loss occurs.

          Investment Reserve
          ------------------

          Under Brazilian Corporate Law, a portion of a corporation's
"adjusted income" may be allocated for discretionary appropriations for plant
expansion and other fixed or working capital investment projects, including
share buyback programs. The amounts appropriated in such reserves are based on
a capital budget previously presented by management and approved by
shareholders.

          Pursuant to the Brazilian Corporate Law, the Investment Reserve
balance is not allowed to be greater than the company's capital. In the case
such limit is reached, shareholders may vote for the amount in excess to be
converted into capital or distributed as dividends.

          Unrealized Income Reserve
          -------------------------

          As of March 1, 2002, under Law No. 10,313, which amended the
Brazilian Corporate Law, the amount by which the mandatory dividend exceeds
the "realized" portion of net profits for any particular year may be allocated
to the unrealized income reserve. The "realized" portion of net profits is the
amount by which "adjusted income" exceed the sum of:

          (i)  our net positive results, if any, from the equity method of
               accounting for earnings and losses of our subsidiaries and
               certain affiliates; and


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<PAGE>


          (ii) the profits, gains or return obtained on transactions completed
               after the end of the following fiscal year.

          Tax Incentive Reserve
          ---------------------

          Under Brazilian tax laws, a portion of "adjusted income" may also be
allocated to a general "tax incentive reserve" in amounts corresponding to
reductions in the company's income tax generated by credits for particular
government-approved investments. The reserve is available only in connection
with the acquisition of capital stock of companies undertaking specific
government-approved projects. In the case of AmBev a Tax Incentive Reserve is
booked in the Shareholder's Equity of Companhia Brasileira de Bebidas ("CBB"),
our main operational subsidiary.



          VOTING RIGHTS

          Each common share entitles its holder to one vote at AmBev's
shareholders meetings. Holders of preferred shares are not entitled to vote at
AmBev's shareholders' meetings.

          Brazilian Corporate Law provides that non-voting preferred shares
entitled to receive minimum or fixed dividends acquire voting rights in the
event that the company fails to pay the minimum or fixed dividends to which
such shares are entitled for the period established by company's bylaws, which
may not exceed three consecutive fiscal years. The voting rights continue
until payment of dividends is resumed (or until all dividends due are paid, in
the case of preferred shares with the right to receive dividends
cumulatively). The same rule applies to preferred shares with restricted
voting rights, causing the suspension of the restrictions in place. The
existing preferred shares of AmBev will not acquire such voting rights as
AmBev preferred shares are not entitled to receive minimum or fixed dividends.



          ELECTION OF DIRECTORS

          Each common share of AmBev represents one vote at any shareholders'
meeting in connection with the election of the Board of Directors of AmBev.
Due to recent changes introduced by Law No. 10,303/01, minority shareholders
holding at least 15% of voting capital or preferred shareholders holding at
least 10% of total capital may each elect one member of the Board of Directors
and its alternate member. Additionally, if such shareholders do not achieve
such percentage, they can jointly appoint one member of the Board of Directors
and its alternate member once they represent, together, at least 10% of total
capital. In order to exercise these minority rights, shareholders must prove
that they have held the shares for at least the last three months.

          If such prerogative is exercised with the adoption of a cumulative
voting procedure, the controlling shareholder will always have the right to
elect the same number of members appointed by minority shareholders plus one,
independently of the number of directors provided in the company's bylaws.

          Additionally, until the 2005 Ordinary Shareholders Meetings, the
director appointed by preferred shareholders (whether or not together with
voting minority shareholders) shall be selected from a three-name list
previously prepared by the controlling shareholder.


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          Shareholders holding shares representing at least 10% of the shares
entitled to vote in the shareholders' meeting, or such smaller percentage
applicable according to a sliding scale determined by the CVM and based on the
capital of the company, have the right to request that a cumulative voting
procedure be adopted. Under such procedure, each voting share shall have as
many votes as there are positions of directors to be filled, and each
shareholder may cast all the votes for a single candidate or distribute them
among various candidates.

          Under the bylaws of AmBev and applicable law, the number of
directors may be reduced to a minimum of three. Under Brazilian Corporate Law,
if the number of directors is reduced to five or less, the percentage
necessary for any minority shareholder or group of minority shareholders to
elect at least one member of the Board of Directors under the cumulative vote
procedure cannot exceed 20% of the voting shares of AmBev. Because the AmBev
shareholders' agreement provides that the FAHZ shall have the right to appoint
four members of the Board of Directors, any reduction in the number of such
members to fewer than four would be subject to the FAHZ's approval.



          LIQUIDATION

          In the event of liquidation, a general shareholders meeting shall
determine the form of liquidation and appoint a fiscal committee to supervise
the process during the liquidation period. A liquidator will be appointed by
the Board of Directors.

          Upon liquidation, the AmBev preferred shares have an absolute
preference over the AmBev common shares. In the event of a liquidation, the
assets available for distribution to AmBev's shareholders would be distributed
first to the preferred shareholders in an amount equal to their pro rata share
of the legal capital of the company (AmBev's current bylaws state that its
capital is R$3,142,055,047.38), prior to making any distributions to AmBev's
common shareholders. In the event that the assets to be so distributed are
insufficient to fully compensate AmBev's preferred shareholders, the preferred
shareholders would each receive a pro rata amount (based on their pro rata
share of the legal capital of the company excluding the common shares in such
calculation) of any available assets.

          Although the FAHZ's assets are consolidated for the purposes of U.S.
GAAP, in the event of liquidation the creditors of AmBev would not have access
to the assets of the FAHZ.



         SHAREHOLDERS' MEETING

          A general meeting is convened by publishing, no later than 15 days
prior to the scheduled meeting date and no fewer than three times, a notice in
the Diario Oficial do Estado de Sao Paulo and in a newspaper with general
circulation in Sao Paulo, where AmBev has its registered office. The
shareholders of AmBev have previously designated local newspapers in the
cities of Sao Paulo for this purpose. Such notice must contain the agenda for
the meeting.

          A general meeting may be held if shareholders representing at least
one-quarter of the voting shares are present, except in some cases provided
for by the law, such as for the alteration of company's bylaws, which requires
the presence of shareholders representing at least two-thirds of the voting
shares. If no such quorum is present, notice must again be given in the same
manner as described above, and a meeting may then be convened without any
specific quorum requirement, subject to the minimum quorum and voting
requirements for specific matters, as


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discussed below. Shareholders without voting rights may attend a general
meeting and take part in the discussion of matters submitted for
consideration.

          Except as otherwise provided by law, resolutions of a general
meeting are passed by a simple majority vote of the shares present or
represented at the meeting, abstentions not being taken into account. Under
Brazilian Corporate Law, the approval of shareholders representing at least a
majority of the issued and outstanding voting shares is required for the types
of action described below, as well as, in the case of items (a) and (b), a
majority of issued and outstanding shares of the affected class:

          o    (a) creating preferred shares or increasing disproportionately
               an existing class of preferred shares relative to the other
               classes of shares, unless such action is provided for or
               authorized by the bylaws;

          o    (b) modifying a preference, privilege or condition of
               redemption or amortization conferred on one or more classes of
               preferred shares, or creating a new class with greater
               privileges than the existing classes of preferred shares;

          o    (c) reducing the mandatory dividend;

          o    (d) merging AmBev with another company or consolidating or
               splitting it;

          o    (e) participating in a centralized group of companies as
               defined under Brazilian Corporate Law;

          o    (f) changing the corporate objectives of AmBev;

          o    (g) creating founders' shares; and

          o    (h) dissolving AmBev or ceasing its liquidation status.

          General meetings can be called by the Board of Directors of AmBev.
Under the Brazilian Corporate Law, meetings can also be convened by AmBev's
shareholders as follows: (i) by any shareholder if, under certain
circumstances set forth in the Brazilian Corporate Law, the directors take
more than 60 days to convene a general shareholders' meeting; (ii) by the
shareholders of at least 5% of AmBev's total capital stock if, after a period
of 8 days, the directors fail to call a general shareholders' meeting that has
been requested by such shareholders; and (iii) by the shareholders of at least
5% of either AmBev's voting capital stock or AmBev's non-voting capital stock
if, after a period of 8 days, the directors fail to call a general meeting for
the purpose of installing a fiscal committee that has been requested by such
shareholders. Additionally, under certain circumstances set forth in the
Brazilian Corporate Law, meetings can also be convened by AmBev's fiscal
committee. For further information regarding AmBev's fiscal committee, see
"Directors, Senior Management and Employees--Directors--Board Practices-Fiscal
Committee".

          A shareholder may be represented at a general meeting by an
attorney-in-fact appointed no more than one year before the meeting, who must
be a shareholder, a company officer or a lawyer. For a public company such as
AmBev, the attorney-in-fact may also be a financial institution.


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          Shareholders may not exercise voting rights whenever they are
contributing assets in a capital increase paid in kind or with respect to the
approval of its own accounts, as well as in those resolutions that may favor
such shareholders specifically, or whenever there is a conflicting interest
with the company. Mergers between affiliated parties are subject to a special
statutory valuation procedure intended to determine whether the exchange ratio
is adequate for all the parties involved, without preventing the resolution to
be approved for lack of the statutory quorum.



         RESTRICTIONS ON FOREIGN INVESTMENT

          There are no restrictions on ownership or voting rights in respect
of capital stock of AmBev owned by individuals or legal entities domiciled
outside Brazil. For a description of voting rights, see "--Voting Rights". The
right to convert dividend payments and proceeds from the sale of preferred or
common shares into foreign currency and to remit such amounts outside Brazil,
however, is subject to exchange control restrictions and foreign investment
legislation. For a description of these exchange control restrictions and
foreign investment legislation, see "Key Information--Exchange Controls".



         WITHDRAWAL RIGHTS

          Under Brazilian Corporate Law, a dissenting shareholder has the
right to withdraw from AmBev and be reimbursed for the value of the common or
preferred shares held, whenever a decision is taken at a shareholders' meeting
by a qualified quorum of shareholders representing at least 50% of the total
outstanding voting capital to:

     o    create preferred shares or increase disproportionately an existing
          class of preferred shares relative to the other classes of shares,
          unless such action is provided for or authorized by AmBev's bylaws;

     o    modify a preference, privilege or condition of redemption or
          amortization conferred on one or more classes of preferred shares,
          or create a new class with greater privileges than the existing
          classes of preferred shares;

     o    reduce the mandatory dividend;

     o    merge or consolidate AmBev with another company;(1)

     o    participate in a centralized group of companies;

     o    change the corporate objectives of AmBev;

-----------
1 As defined under Law 10,303/01, withdrawal rights shall not apply in
connection with these matters when the company's shares fulfill both
requirements of liquidity (shares are included in securities portfolio
negotiated in futures stock exchanges within Brazil or abroad (as determined
by CVM) such as IBOVESPA index of the Sao Paulo Stock Exchange) and dispersion
(less than 50% of the outstanding shares of the company are held, directly or
indirectly, by the controlling shareholders). The latter is AmBev's current
situation, which means dissenting shareholders of AmBev would not have
withdrawal rights upon occurrence of any of these cases.

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     o    transform AmBev into another corporate type;

     o    transfer all or a substantial part of the assets of AmBev to another
          company to create a wholly-owned subsidiary or in case AmBev is
          transformed in a wholly-owned subsidiary of another company; or

     o    approve the acquisition of another company, the price of which
          exceeds the limits set forth in Brazilian Corporate Law.

          Furthermore, if a governmental entity acquires control of AmBev
through expropriation of shares, shareholders will have the right to withdraw
from AmBev and be reimbursed for the value of the shareholders' equity
attributable to their equity interest.

          The withdrawal rights lapse 30 days after publication of the minutes
of the relevant shareholders' meeting in the Brazilian press. AmBev would be
entitled to reconsider any action triggering withdrawal rights within 10 days
following the expiration of such rights if the redemption of shares of
dissenting shareholders would jeopardize the financial stability of AmBev.
Shares to be purchased by AmBev from the dissenting shareholders exercising
withdrawal rights will be valued at an amount equal to the ratable portion
attributable to such shares of the shareholders' equity of AmBev as shown on
the last balance sheet approved at a general meeting of the shareholders (book
value). However, if more than 60 days have elapsed since the date of such
balance sheet; dissenting shareholders may require that the value of their
shares be calculated on the basis of a new balance sheet. As a general rule,
shareholders who acquire their shares after the first notice convening the
shareholders' meeting or after the relevant press release concerning the
meeting are published will not be entitled to withdrawal rights.



          PREEMPTIVE RIGHTS

          Each shareholder of AmBev generally has a preemptive right to
subscribe for shares in capital increases, in proportion to its shareholdings.
A minimum period of 30 days following the publication of notice of the capital
increase is allowed for the exercise of the right and the right is negotiable.
In the event of a capital increase which would maintain or increase the
proportion of capital represented by preferred or common shares, holders of
preferred ADSs or common ADSs, as the case may be, would have preemptive
rights to subscribe only to newly issued preferred shares or common shares, as
applicable. In the event of a capital increase which would reduce the
proportion of capital represented by preferred shares or common shares,
holders of preferred ADSs or common ADSs, as the case may be, would have
preemptive rights to subscribe for preferred shares or common shares, as
applicable, in proportion to their shareholdings only to the extent necessary
to prevent dilution of their interest in AmBev. AmBev's bylaws provide that
its Board of Directors may, within the limit of its authorized capital,
withdraw preemptive rights to existing shareholders in connection with an
increase in share capital through sale in stock exchanges, public offerings or
public tender offers. In addition, Brazilian law provides that the



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exercise of stock options pursuant to certain stock option plans, such as our
stock ownership plan, is not subject to preemptive rights.



          FORM AND TRANSFER

          Brazilian law provides that ownership of shares of capital stock of
a Brazilian corporation shall generally be evidenced only by a record of
ownership maintained by either the corporation or an accredited intermediary,
such as a bank, acting as a registrar for the shares. Banco Itau S.A.
currently maintains AmBev's share ownership records.

          Because the preferred shares and common shares of AmBev are in
registered book-entry form, a transfer of such preferred and common shares is
made under the rules of Brazilian Corporate Law, which provides that a
transfer of shares is effected by an entry made by the registrar for AmBev's
shares in its books, by debiting the share account of the transferor and
crediting the share account of the transferee.

          Transfers of preferred and common shares by a foreign investor are
made in the same way and executed by such investor's local agent on the
investor's behalf except that, if the original investment was registered with
the Central Bank pursuant to the foreign investment regulations, the foreign
investor should also seek amendment, if necessary, through its local agent, of
the corresponding electronic registration to reflect the new ownership.

          The Sao Paulo Stock Exchange operates a central clearing system. A
holder of our shares may choose, at its discretion, to participate in this
system, and all shares elected to be put into the system will be deposited in
custody with the stock exchange (through a Brazilian institution that is duly
authorized to operate by the Central Bank and maintains a clearing account
with the stock exchange). The fact that these shares are subject to custody
with the stock exchange will be reflected in our registry of shareholders.
Each participating shareholder will, in turn, be registered in our register of
beneficial shareholders maintained by the stock exchange and will be treated
in the same way as registered shareholders.



          DISCLOSURE OF PRINCIPAL SHAREHOLDERS

          Under Brazilian law, shareholders owning more than ten percent of a
company's voting shares, such as the holders of AmBev's common shares, must
publicly disclose their shareholder ownership.



          OTHER CHANGES IMPLEMENTED UNDER THE NEW BRAZILIAN CORPORATE LAW

          Besides the changes already described in this annual report, Law No.
10,303, which amended the Brazilian Corporate Law and current regulations,
provides for the following changes:

     o    upon a sale of control, the acquiror is required to launch a tender
          offer to purchase all minority voting shares at a price equal to at
          least 80% of the control price;

     o    if provided for in the bylaws, disputes among our shareholders will
          be subject to arbitration. Our bylaws currently do not provide for
          arbitration;


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     o    upon the occurrence of a tender offer aiming at delisting our
          company or through which our controlling shareholders acquire more
          than one-third of the float shares on September 4, 2000, the
          purchase price shall be equal to the fair value of the shares
          considering the total number of outstanding shares;

     o    members of our board of directors elected by the non controlling
          shareholders will have the right to veto the choice of the
          independent accountant of the controlling shareholder;

     o    our controlling shareholders, the shareholders that elect members to
          our board of directors and to the board of auditors, the members of
          our board of directors and board of auditors and our executive
          officers will be required to disclose any purchase or sale of our
          shares to the CVM and to the Sao Paulo Stock Exchange; and

     o    the chairman of any shareholders' or board of directors' meeting
          shall disregard any vote that is rendered against provisions of any
          shareholders' agreement if that shareholders' agreement has been
          duly filed with us.


                              MATERIAL CONTRACTS

          The following is a summary of the material contracts to which we are
a party. For directions on how to obtain these documents, see "Exhibits and
certifications".


         SHAREHOLDERS AGREEMENT

          The agreement between the shareholders of Brahma and Antarctica to
form AmBev, including the amendments inserted in connection with the
transaction between, interalia, AmBev and Interbrew S.A., is discussed in
"Major Shareholders and Related Party Transactions--Major Shareholders--AmBev
Shareholders Agreement."


          INCORPORACAO AGREEMENT

          The agreement between AmBev, Interbrew, Labatt and Labatt Brewing
Canada Holding Ltd., with respect to AmBev's proposed acquisition of Labatt,
is discussed in "Background of the Company-Interbrew-AmBev Transactions-Proposed
Acquisition of Labatt - Incorporacao Agreement."



         GOVERNANCE AGREEMENT

          The agreement relating to the governance of AmBev entered into
between Fundacao, Braco, ECAP, AmBev and BAC pursuant to the stock purchase
agreement between AmBev and BAC is discussed in "Major Shareholders and
Related Party Transactions--Major Shareholders--AmBev Share Transfer Agreement
and AmBev Governance Agreement."


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         ACQUISITIONS, DISPOSITIONS AND JOINT VENTURES

          We have discussed the details of all material acquisitions,
dispositions and joint ventures in "Background on the Company - The
Interbrew-AmBev Transaction", "Information on the Company - Other Acquisitions
and Dispositions" and "Information on the Company - Joint Ventures and
Strategic Alliances."

          "Information on the Company--Interest in Quinsa", "Information on
the Company--Other Acquisitions and Dispositions" and "Information on the
Company--Joint Ventures and Strategic Alliances".


         THE ANTITRUST PERFORMANCE AGREEMENT

          We are currently subject to one antitrust performance agreement in
effect. See "Consolidated Financial Statements and Other Financial
Information--Legal Proceedings". This agreement was signed with CADE in Brazil
and relates to the Brahma and Antarctica combination.


         THE CONDITIONAL APPROVAL OF OUR DEAL WITH QUINSA

          The completion of our deal with Quinsa required the approval of the
Comision Nacional de Defensa de la Competencia ("CNDC"), the Argentinean
antitrust agency. The approval was obtained in January 2003 subject to the
accomplishment of some specific conditions. For further information on this
matter see "Information on the Company--Interest in Quinsa".


         DEBT ISSUANCES

          In August 2001, AmBev raised Japanese Yen 39,060 million through a
syndicated loan. The loan has a three-year maturity and an interest rate of
Yen LIBOR plus 2.37% per annum. This loan is jointly guaranteed by AmBev and
its subsidiaries and is subject to indebtedness and liquidity ratios.

          In December 2001, CBB issued U.S.$500 million 10 1/2% notes due
December 2011 in the U.S. securities markets, fully guaranteed by AmBev. This
offering significantly increased the average maturity of AmBev outstanding
debt. The transaction was priced at 98.56% of the nominal principal amount
with a coupon rate of 10.5%. On August 28, 2002, we consummated an SEC
registered exchange offer. These notes contain certain covenants and events of
default which, if triggered, may cause accelerated amortization.

          In September 2003, CBB issued U.S.$500 million 8.75% notes due
September 2013 in the U.S. securities markets, fully guaranteed by AmBev. The
transaction was priced at 99.67% of the nominal principal amount with a coupon
rate of 8.75%. These notes contain certain covenants and events of default
which, if triggered, may cause accelerated amortization.


         RAW MATERIALS AND PACKAGING

          We have a number of contracts to buy certain key ingredients in the
production process of both beer and soft drinks, as well as materials used in
the packaging of our products such as aluminum, plastic and glass. See
"Information on the Company--Production and Availability of Raw Materials" and
"Operating and Financial Review and Prospects--Commitments and Contingencies."


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       EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

          There are no restrictions on ownership of our capital stock by
individuals or legal entities domiciled outside Brazil. However, the right to
convert dividend payments and proceeds from the sale of preferred shares or
common shares into foreign currency and to remit such amounts outside Brazil
is subject to restrictions under foreign investment legislation which
generally requires, among other things, that the relevant investment be
registered with the Central Bank of Brazil. These restrictions on the
remittance of foreign capital abroad could hinder or prevent the custodian for
the preferred shares or common shares represented by American Depositary
Shares, or holders who have exchanged American Depositary Shares for preferred
shares or common shares, from converting dividends, distributions or the
proceeds from any sale of preferred shares or common shares, as the case may
be, into U.S. dollars and remitting such U.S. dollars abroad. Delays in, or
refusal to grant any required government approval for conversions of Brazilian
currency payments and remittances abroad of amounts owed to holders of
American Depositary Shares could adversely affect holders of American
Depositary Receipts.

          Under Resolution No. 2,689, foreign investors may invest in almost
all financial assets and engage in almost all transactions available in the
Brazilian financial and capital markets, provided that certain requirements
are fulfilled. In accordance with Resolution No. 2,689, the definition of
foreign investor includes individuals, legal entities, mutual funds and other
collective investment entities, domiciled or headquartered abroad.

          Under Resolution No. 2,689, a foreign investor must:

     o    appoint at least one representative in Brazil, with powers to
          perform actions relating to its investment,

     o    complete the appropriate foreign investor registration form,

     o    register as a foreign investor with the CVM, and

     o    register its foreign investment with the Central Bank of Brazil.

          Securities and other financial assets held by foreign investors
pursuant to Resolution No. 2,689 must be registered or maintained in deposit
accounts or under the custody of an entity duly licensed by the Central Bank
of Brazil or the CVM. In addition securities trading is restricted to
transactions carried out on stock exchanges or through organized
over-the-counter markets licensed by the CVM, except for subscription,
bonification, conversion of debentures into shares, securities indexes,
purchase and sale of investment funds quotas and, if permitted by the CVM,
going private transactions, canceling or suspension of trading. Moreover, the
offshore transfer or assignment of the securities or other financial assets
held by foreign investors pursuant to Resolution No. 2,689 are prohibited,
except for transfers resulting from a corporate reorganization, or occurring
upon the death of an investor by operation of law or will.

          Resolution No. 1,927 of the National Monetary Council, which is the
restated and amended Annex V to Resolution No. 1,289, which we call the Annex
V Regulations, provides for the issuance of depositary receipts in foreign
markets in respect of shares of Brazilian issuers. It provides that the
proceeds from the sale of American Depositary Shares by holders of American
Depositary Receipts outside Brazil are free of Brazilian foreign investment
controls and holders of American Depositary Shares who are not resident in a
tax haven jurisdiction (i.e. a country or location that does not impose taxes
on income or where the maximum income tax rate is lower than 20%, or where the
legislation imposes restrictions on disclosure of the shareholding composition
or the ownership of the investment) will be entitled to favorable tax
treatment.


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          An electronic registration has been issued by the custodian in the
name of the Bank of New York, the depositary, with respect to the American
Depositary Shares. Pursuant to this electronic registration, the custodian and
the depositary are able to convert dividends and other distributions with
respect to the preferred shares or common shares represented by American
Depositary Shares into foreign currency and to remit the proceeds outside
Brazil. If a holder exchanges American Depositary Shares for preferred shares
or common shares, the holder may continue to rely on the custodian's
electronic registration for only five business days after the exchange. After
that, the holder must seek to obtain its own electronic registration with the
Central Bank of Brazil under Law No. 4,131 or Resolution No. 2,689.
Thereafter, unless the holder has registered its investment with the Central
Bank of Brazil, such holder may not convert into foreign currency and remit
outside Brazil the proceeds from the disposition of, or distributions with
respect to, such preferred shares or common shares. A holder that obtains an
electronic registration generally will be subject to less favorable Brazilian
tax treatment than a holder of American Depositary Shares. See "--Taxation".

          There are two principal foreign exchange markets in Brazil (which
have operated under identical operational limits and had identical rates since
February 1999):

     o    the commercial rate exchange market, and

     o    the floating rate exchange market.

          Most trade and financial foreign-exchange transactions, including
transactions relating to the purchase or sale of shares or the payment of
dividends or interest with respect to shares, are carried out on the
commercial market. Only a Brazilian bank authorized to buy and sell currency
in the commercial market may effect purchases of foreign currencies in that
market. In both markets, rates are freely negotiated, but may be strongly
influenced by Central Bank of Brazil intervention. See "Key
Information--Exchange Rates".

          Under Brazilian law, whenever there is a serious imbalance in
Brazil's balance of payments or reasons to foresee a serious imbalance, the
Brazilian government may impose temporary restrictions on the remittance to
foreign investors of the proceeds of their investments in Brazil, and on the
conversion of Brazilian currency into foreign currencies. Such restrictions
may hinder or prevent the custodian or holders who have exchanged American
Depositary Shares for underlying preferred shares or common shares from
converting distributions or the proceeds from any sale of such shares, as the
case may be, into U.S. dollars and remitting such U.S. dollars abroad.


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                                   TAXATION

          The following discussion summarizes the principal Brazilian and U.S.
Federal income tax consequences of acquiring, holding and disposing of notes,
preferred shares or preferred ADSs or AmBev's common shares or common ADSs.
This discussion is not a comprehensive discussion of all the tax
considerations that may be relevant to a decision to purchase, hold or dispose
notes, preferred shares or preferred ADSs or common shares or common ADSs and
is not applicable to all categories of investors, some of which may be subject
to special rules. Each prospective purchaser is urged to consult its own tax
advisor about the particular Brazilian and U.S. tax consequences to it of an
investment in the preferred shares or preferred ADSs or common shares or
common ADSs.

          The summary is based upon tax laws of Brazil and the U.S. and the
regulations thereunder, as in effect on the date hereof, which are subject to
change (possibly with retroactive effect). Although there is at present no
income tax treaty between Brazil and the U.S., the tax authorities of the two
countries have had discussions that may culminate in a treaty. No assurance
can be given, however, as to whether or when a treaty will enter into force or
of how it will affect the U.S. Holders of, or, any of the notes, preferred
shares, preferred ADSs, common shares, or common ADSs. This summary is also
based on representations of the depositary and on the assumption that each
obligation in the Deposit Agreement relating to the preferred ADSs and common
ADSs, as applicable, and the related documents will be performed in accordance
with its terms.

BRAZILIAN TAX CONSIDERATIONS

          The following discussion summarizes the principal Brazilian tax
consequences of the acquisition, ownership and disposition of preferred and
common shares of AmBev or preferred and common ADSs of AmBev by a holder that
is not deemed to be domiciled in Brazil for purposes of Brazilian taxation
and, in the case of a holder of preferred or common shares, which has
registered its investment in such securities with the Central Bank as a U.S.
dollar investment (in each case, a Non-Brazilian Holder). The discussion does
not purport to be a comprehensive description of all tax considerations that
may be relevant to a decision to purchase preferred or common shares or
preferred or common ADSs. It is based on Brazilian law as currently in effect.
Any change in such law may change the consequences described below. The
following discussion does not specifically address all of the Brazilian tax
considerations applicable to any particular Non-Brazilian Holder, and each
Non-Brazilian Holder should consult his or her own tax advisor concerning the
Brazilian tax consequences of an investment in preferred or common shares or
preferred or common ADSs of AmBev.

          Taxation of Dividends. Dividends, including dividends in kind, paid
by AmBev to The Bank of New York in respect of the preferred or common shares
underlying the ADSs or to a Non-Brazilian Holder in respect of preferred or
common shares generally will not be subject to Brazilian withholding tax.
Dividends relating to profits generated prior to December 31, 1995 are subject
to a Brazilian withholding tax of 15% to 25% according to the tax legislation
applicable to each corresponding year. As from January 1, 1996, dividends
relating to profits are not subject to withholding tax in Brazil.

          Taxation of Gains. Gains realized outside of Brazil by a
Non-Brazilian Holder on the disposition of preferred or common ADSs to another
Non-Brazilian Holder are not subject to Brazilian tax.

          The withdrawal of preferred or common ADSs in exchange for preferred
or common shares is not subject to Brazilian tax. The deposit of AmBev's
preferred or common shares in connection with the issuance of preferred or
common ADSs is not subject to Brazilian tax, provided that the preferred or
common shares are registered under the Foreign Investment Regulations. There
is a special taxation system applicable to Non-Brazilian Holders (provided
investments are duly registered under the Foreign Investment Regulations and
with CVM and other conditions are fulfilled);


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however, such system is not applicable if the Non-Brazilian Holder is located
in a jurisdiction which does not impose income tax or which has an income tax
lower than 20%4. Upon receipt of the underlying preferred or common shares, a
Non-Brazilian Holder who qualifies under the Foreign Investment Regulations
will be entitled to register the U.S. dollar value of such shares with the
Central Bank as described below.

          Non-Brazilian Holders are not subject to tax in Brazil on gains
realized on sales of preferred or common shares that occur abroad. As a
general rule, Non-Brazilian Holders are subject to a withholding tax imposed
at a rate of 15% on gains realized on sales or exchanges of preferred or
common shares that occur in Brazil to or with a resident of Brazil, outside a
Brazilian stock exchange. Non-Brazilian Holders are generally subject to
withholding tax at a rate of 20% (transactions occurred after January 1, 2002)
on gains realized on sales or exchanges in Brazil of preferred or common
shares that occur on a Brazilian stock exchange, unless (a) such a sale is
made within five business days of the withdrawal of such preferred or common
shares in exchange for ADSs and the proceeds of such sale are remitted abroad
within such five-day period, or (b) such a sale is made under the Foreign
Investment Regulations by Non-Brazilian Holders which register with the CVM,
in which case such gains are exempt. If the foreign investor is located in a
jurisdiction which does not impose income tax or which has an income tax rate
lower than 20%, it will be subject to the same general taxation rules
applicable to Brazilian residents. The "gain realized" as a result of a
transaction on a Brazilian stock exchange is the difference between the amount
in Brazilian currency realized on the sale or exchange of the shares and their
acquisition cost, without any correction for inflation. The "gain realized" as
a result of a transaction with shares which are registered under a certificate
of registration of investment (other than Foreign Investment Regulations) will
be calculated based on the foreign currency amount registered with the Central
Bank. There can be no assurance that the current preferential treatment for
holders of ADSs and Non-Brazilian Holders of preferred and common shares under
the Foreign Investment Regulations will continue in the future or that it will
not be changed in the future. Reductions in the tax rate provided for by
Brazil's tax treaties do not apply to tax on gains realized on sales or
exchanges of preferred or common shares.

          Any exercise of preemptive rights relating to the preferred or
common shares or preferred or common ADSs of AmBev will not be subject to
Brazilian taxation. Any gain on the sale or assignment of preemptive rights
relating to the preferred or common shares by The Bank of New York will not be
subject to Brazilian taxation.

          The United States and Brazil do not currently have any reciprocal
tax treaty regarding tax withholding provisions.

          Distributions of Interest Attributable to Shareholders' Equity. In
accordance with Law No. 9,249, dated December 26, 1995, Brazilian corporations
may make payments to shareholders characterized as distributions of interest
on the company's shareholders' equity. Such interest is limited to the federal
government's long-term interest rate (TJLP) as determined by the Central Bank
from time to time (9.75% per annum for the three-month period starting April
2004), and cannot exceed the greater of:

     o    50% of net income (before taking such distribution and any
          deductions for income taxes into account) for the period in respect
          of which the payment is made; or

     o    50% of retained earnings.

-----------------------------
3 The countries currently included in this concept, according to Normative
Instruction 188/02, are: American Samoa, Andorra, Anguilla, Antigua and
Barbuda, Aruba, Bahamas, Bahrain, Barbados, Belize, Bermuda, British Virgin
Islands, Campione D'Italia, Cayman Islands, Channel Islands (Jersey, Guernsey,
Alderney and Sark), Cook Islands, Costa Rica, Cyprus, Djibouti, Dominica,
Gibraltar, Grenada, Hong Kong, Isle of Man, Lebanon, Lebuan, Liberia,
Liechtenstein, Luxembourg (only to holding companies governed by Law dated
7/31/1929), Macau, Madeira Islands, Maldives, Malta, Marshall Islands,
Mauricio, Monaco, Montserrat, Nauru, Netherland Antilles, Niue, Oman, Panama,
Saint Kitts and Nevis, Saint Lucia, Saint Vincent and The Grenadines, San
Marino, Seychelles, Singapore, Tonga, Turks and Caicos Islands, United Arab
Emirates, US Virgin Islands, Vanuatu and Western Samoa.


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          Distributions of interest on shareholders' equity in respect of the
preferred or common shares paid to shareholders who are either Brazilian
residents or non-Brazilian residents, including holders of ADSs, are subject
to Brazilian withholding tax at the rate of 15% and shall be deductible by
AmBev as long as the payment of a distribution of interest is approved in a
general meeting of shareholders of AmBev. The distribution of interest on
shareholders' equity may be determined by the Board of Directors of AmBev. No
assurance can be given that the Board of Directors of AmBev will not determine
that future distributions of profits may be made by means of interest on
shareholders' equity instead of by means of dividends.

          The amounts paid as distribution of interest on shareholders' equity
are deductible for corporate income tax and social contribution on profit,
both of which are taxes levied on AmBev's profits.

OTHER RELEVANT BRAZILIAN TAXES

          There are no Brazilian inheritance, gift or succession taxes
applicable to the ownership, transfer or disposition of preferred or common
shares or preferred or common ADSs by a Non-Brazilian Holder except for gift
and inheritance taxes which are levied by some states of Brazil on gifts made
or inheritances bestowed by individuals or entities not resident or domiciled
in Brazil or domiciled within the state to individuals or entities resident or
domiciled within such state in Brazil. There is no Brazilian stamp, issue,
registration or similar taxes or duties payable by holders of preferred or
common shares or preferred or common ADSs.

          Pursuant to Decree 2,219 of May 2, 1997, Brazilian currency
resulting from the conversion of the proceeds received by a Brazilian entity
from a foreign investment in the Brazilian securities market, including those
in connection with the investment in the preferred or common shares of AmBev,
the preferred or common ADSs of AmBev and those made under Foreign Investment
Regulations, is potentially subject to a transactions tax (IOF), although at
present the rate of such tax is zero percent. Under Law 8,894 of June 21,
1994, such IOF tax rate may be increased at any time to a maximum of 25%, but
any such increase will only be applicable to transactions occurring after such
increase becomes effective.

          CPMF. Financial transfers are taxed by the CPMF (Temporary
Contribution over Financial Transactions), at a rate of 0.38%. Specifically in
connection with foreign investments, the CPMF is levied upon the remittance of
proceeds on the amount converted in reais of the transaction and is required
to be withheld by the financial institution that carries out the transaction.

          Registered Capital. The amount of an investment in preferred or
common shares held by a Non-Brazilian Holder who qualifies under the Foreign
Investment Regulations and obtains registration with the CVM, or by The Bank
of New York, as the depositary representing such holder, is eligible for
registration with the Central Bank. Such registration allows the remittance
outside of Brazil of any proceeds of distributions on the shares, and amounts
realized with respect to disposition of such shares. The amounts received in
Brazilian currency are converted into foreign currency through the use of the
commercial market rate. The registered capital for preferred shares purchased
in the form of a preferred ADS or common shares purchased in the form of a
common ADS or purchased in Brazil, and deposited with The Bank of New York in
exchange for a preferred or common ADS, will be equal to their purchase price
(in U.S. dollars) to the purchaser. The registered capital for preferred or
common shares that are withdrawn upon surrender of preferred or common ADSs,
as applicable, will be the U.S. dollar equivalent of the average price of the
preferred or common shares, as applicable, on the Brazilian stock exchange on
which the greatest number of such preferred or common shares, as applicable,
was sold on the day of withdrawal. If no preferred or common shares, as
applicable, were sold on such day, the registered capital will refer to the
average price on the Brazilian stock exchange on which the greatest number of
preferred or common shares, as applicable, was sold in the 15 trading sessions
immediately preceding such withdrawal. The U.S. dollar value of the preferred
or common shares, as applicable, is determined on the basis


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of the average commercial market rate quoted by the Central Bank on such date
or, if the average price of preferred or common shares is determined under the
last preceding sentence, the average of such average quoted rates on the same
15 dates used to determine the average price of the preferred or common
shares.

          A Non-Brazilian Holder of preferred or common shares may experience
delays in effecting such action which may delay remittances abroad. Such a
delay may adversely affect the amount, in U.S. dollars, received by the
Non-Brazilian Holder.

BRAZILIAN TAXATION ON THE NOTES

          This summary is limited to noteholders that are non-residents in
Brazil and is based on the tax regulations presently in force, thus not
contemplating any possible changes in Brazilian tax legislation in the future.

          Interest on the notes (including any additional amount) paid,
credited, delivered, used or remitted to non-residents is subject to a 15%
withholding income tax or a lower rate if so provided for in the applicable
tax treaty to avoid double taxation signed between Brazil and the country
where the recipient of the note is domiciled. The rate is increased to 25% in
case both of the following situations occur: (i) the beneficiary of the
payment is domiciled in a tax haven jurisdiction, defined by Brazilian tax
laws as a country that does not impose a tax on income or imposes such a tax
at 20% or less, and (ii) if any portion of principal under any such debt
obligation is repaid in a way that the average life of the debt obligation
becomes less than 96 months from the disbursement date. In this case payments
made by the obligor to those beneficiaries in respect of interest and other
additional amounts will be retroactively subject to a withholding tax of 25%
plus an interest penalty for late payment, calculated from the disbursement
date onwards.

          Brazilian tax law expressly authorizes that the payment of this
withholding income tax be borne by the Brazilian paying entity so allowing the
payment of the remuneration free of any tax. Under the terms of the Indenture
among CBB, as Issuer, the Bank of New York, as Trustee, and Deutsche Bank
Luxembourg S.A., as Paying Agent, related to the notes, all payments of or in
respect of principal and interest on the notes shall be made free and clear
of, and without withholding or deduction for or on account of, any present or
future taxes, penalties, fines, duties, assessments or other governmental
charges of whatsoever nature.

          Earnings or capital gains resulting from the sale, exchange,
retirement or other kind of disposition of the notes by a non-resident in
Brazil to another person non-resident in Brazil is not subject to any
Brazilian tax. A disposition of these notes by a non-resident to a Brazilian
resident, in principle is not subject to taxation, but the issue is
disputable.

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

          The following summary describes the material U.S. Federal income tax
consequences of holding notes, preferred shares, preferred ADSs, common shares
or common ADSs. This summary is based on the Internal Revenue Code of 1986, as
amended (the Code), its legislative history, existing final, temporary and
proposed Treasury Regulations, rulings and judicial decisions, all as
currently in effect and all of which are subject to prospective and
retroactive rulings and changes.

          This summary does not purport to address all U.S. Federal income tax
consequences that may be relevant to a particular holder and you are urged to
consult your own tax advisor regarding your specific tax situation. The
summary applies only to holders who hold notes, preferred shares, preferred
ADSs, common shares or common ADSs as "capital assets" (generally, property
held for investment) under the Code, and, in the case of the notes, only
holders who purchased their notes in the initial offering at the issue price.


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This summary does not address the tax consequences that may be relevant to
holders in special tax situations including, for example:

     o    insurance companies;

     o    tax-exempt organizations;

     o    dealers in securities or currencies;

     o    traders in securities that elect to use a mark to market method of
          accounting for their securities holdings;

     o    banks, mutual funds or other financial institutions;

     o    United States holders whose functional currency for tax purposes is
          not the United States dollar;

     o    United States expatriates;

     o    an S corporation or small business investment company;

     o    real estate investment trusts;

     o    investors in a pass-through entity;

     o    holders of notes, preferred shares, preferred ADSs, common shares or
          common ADSs as part of a hedge, straddle, conversion or other
          integrated transaction, for tax purposes;

     o    holders who own, directly, indirectly, or constructively, 10% or
          more of the total combined voting power of our stock (including by
          way of owning preferred shares, preferred ADSs, common shares or
          common ADSs); or

     o    holders who acquired their notes, preferred shares, preferred ADSs,
          common shares or common ADSs as compensation.

          This summary assumes that the notes represent indebtedness of U.S.
$500 million and that we are not a passive foreign investment company (PFIC)
for U.S. Federal income tax purposes. Please see the discussion under
"-Taxation of U.S. Holders-Passive Foreign Investment Company Rules" below.

          Further, this summary does not address the alternative minimum tax
consequences of holding notes, preferred shares, preferred ADSs, common shares
or common ADSs or the indirect consequences to holders of equity interests in
entities that own our preferred shares, preferred ADSs, common shares or
common ADSs. In addition, this summary does not address the state, local,
foreign or other tax consequences, if any, of holding our notes, preferred
shares, preferred ADSs, common shares or common ADSs.

          You should consult your own tax advisor regarding the U.S. Federal,
state, local and foreign and other tax consequences of acquiring, owning and
disposing of notes, preferred shares, preferred ADSs, common shares or common
ADSs in your particular circumstances.


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          WE ALSO URGE TO ALL HOLDERS TO CONSULT THEIR TAX ADVISORS REGARDING
THE CONSEQUENCES, IF ANY, OF THE JOB AND GROWTH TAX RELIEF RECONCILIATION ACT
OF 2003 IN LIGHT OF YOUR PARTICULAR CIRCUMSTANCES.

Taxation of U.S. Holders

          For purposes of this summary, you are a "U.S. Holder" if you are a
beneficial owner of a note, preferred shares, preferred ADSs, common shares or
common ADSs and you are for U.S. Federal income tax purposes:

     o    a citizen or resident of the United States;

     o    a corporation, or any other entity taxable as a corporation, created
          or organized in or under the laws of the United States or any state
          thereof, including the District of Columbia;

     o    an estate the income of which is subject to U.S. Federal income tax
          regardless of its source;

     o    a trust if a court within the United States is able to exercise
          primary supervision over its administration and one or more United
          States persons have the authority to control all substantial
          decisions of the trust; or

     o    a person otherwise subject to U.S. Federal income taxation on its
          worldwide income.

          If a partnership holds notes, preferred shares, preferred ADSs,
common shares or common ADSs, the tax treatment of a partner will generally
depend upon the status of the partner and upon the activities of the
partnership. A prospective investor who is a partner of a partnership holding
notes, preferred shares, preferred ADSs, common shares or common ADSs should
consult its own tax advisor.

          A "Non-U.S. Holder" is a beneficial owner of a note, preferred
shares, preferred ADSs, common shares or common ADSs who or which is not a
U.S. Holder.

          For U.S. Federal income tax purposes, a U.S. Holder of an ADS will
be treated as the beneficial owner of the preferred shares or common shares
represented by the applicable ADS.

NOTES

          Interest and Additional Amounts

          Interest on the notes (including additional amounts) will generally
be includible in a U.S. Holder's gross income at the time the interest is
accrued or received, in accordance with the U.S. Holder's regular method (cash
or accrual) of tax accounting. To the extent that amounts are withheld and
additional amounts are paid on the notes, a U.S. Holder will be required to
report income in an amount greater than the cash received on the payments.

          Sale, Exchange, Retirement or Other Disposition

          Unless a nonrecognition provision applies, a U.S. Holder generally
will recognize capital gain or loss upon the sale, exchange, retirement or
other disposition of a note in an amount equal to the difference between the
amount realized upon such sale, exchange, retirement or other disposition
(less any accrued interest not yet taken into income which will be taxable as
ordinary interest income) and the U.S. Holder's tax basis in such note.



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Any such capital gain or loss will be long-term capital gain or loss if the
U.S. Holder has held the note for more than one year at the time of sale,
exchange, retirement or other disposition. A U.S. Holder's ability to offset
capital losses against ordinary income is limited.

          Foreign Tax Credit

          Interest on the notes (including any additional amounts) will be
treated as foreign source income for U.S. Federal income tax purposes, which
may be relevant to a U.S. Holder in calculating such U.S. Holder's foreign tax
credit limitation. A U.S. Holder may be eligible, subject to a number of
complex limitations, for a foreign tax credit or deduction against such U.S.
Holder's U.S. Federal tax income liability for taxes withheld on the notes.
The limitation on foreign taxes eligible for credit is calculated separately
with respect to specific classes of income. For this purpose, interest on the
notes (including any additional amounts) will be treated as "high withholding
tax interest" and, if interest on the notes (including any additional amounts)
were to become subject to a withholding tax at a rate of less than five
percent (5%), then such interest would generally constitute "passive income".
We urge all holders to consult their tax advisors regarding the availability
of the U.S. foreign tax credit under their particular circumstances.

          Any gain or loss realized on the sale, exchange, retirement or other
disposition of a note generally will be treated as U.S. source for purposes of
computing the U.S. foreign tax credit limitation.



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PREFERRED SHARES, PREFERRED ADSS, COMMON SHARES, COMMON ADSS

          Distributions on preferred shares, preferred ADSs, common shares or
common ADSs.

          Subject to the discussion below concerning PFICs, the gross amount
of distributions paid by us to a U.S. Holder (including amounts withheld to
pay Brazilian withholding taxes) with respect to preferred shares, preferred
ADSs, common shares or common ADSs (including distributions of interest on
shareholders' equity) generally will be taxable to such U.S. Holder as
ordinary dividend income or qualified dividend income (as further described
below) to the extent that such distribution is paid, actually or
constructively, out of our current or accumulated earnings and profits (as
determined for U.S. Federal income tax purposes). Distributions in excess of
our current or accumulated earnings and profits will be treated first as a
non-taxable return of capital reducing (on a dollar-for-dollar basis) such
U.S. Holder's tax basis in the preferred shares, preferred ADSs, common shares
or common ADSs, as applicable. Any distribution in excess of such tax basis
will be treated as capital gain and will be either long-term or short-term
capital gain depending upon whether the U.S. Holder held the preferred shares,
preferred ADSs, common shares or common ADSs, as applicable, for more than one
year.

          Dividends received by a U.S. Holder will generally be taxed at
ordinary income tax rates. However, pursuant to the Jobs and Growth Tax Relief
Reconciliation Act of 2003, in the case of dividends that constitute qualified
dividend income and are received by an individual U.S. Holder during the tax
years beginning after 2002 and before 2009, such dividends will be taxed at
the same rate that is applicable to long-term capital gains. For this purpose,
qualified dividend income includes any dividends paid with respect to stock in
a foreign corporation if such stock is "readily tradable on an established
securities market in the United States". Based upon published guidance from
the United States Internal Revenue Service, each of the preferred ADSs and
common ADSs will be treated as traded on an established securities market in
the U.S. because they are listed and traded on the New York Stock Exchange.

          A U.S. Holder generally will be entitled, subject to a number of
complex rules and limitations, to claim a United States foreign tax credit in
respect of any Brazilian withholding taxes imposed on distributions received
on preferred shares, preferred ADSs, common shares or common ADSs. U.S.
Holders who do not elect to claim a foreign tax credit may instead claim a
deduction in respect of such withholdings. Dividends received with respect to
the preferred shares, preferred ADSs, common shares or common ADSs will be
treated as foreign source income and generally will constitute "passive
income" for U.S. foreign tax credit limitation purposes. We urge all holders
to consult their tax advisors regarding the availability of the foreign tax
credit under their particular circumstances.

          Dividends paid by us generally will not be eligible for the
dividends received deduction generally available to certain U.S. corporate
shareholders.

          The amount of any cash distribution paid in Brazilian currency will
equal the U.S. dollar value of the distribution, calculated by reference to
the exchange rate in effect at the time



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the distribution is received by the depositary (in the case of ADSs) or by the
U.S. Holder (in the case of preferred shares or common shares held directly by
such U.S. Holder), regardless of whether the payment is in fact converted to
U.S. dollars at that time. A U.S. Holder should not recognize any foreign
currency gain or loss if such Brazilian currency is converted into U.S.
dollars on the date received. If the Brazilian currency is not converted into
U.S. dollars on the date of receipt, however, gain or loss may be recognized
upon a subsequent sale or other disposition of the Brazilian currency. Such
foreign currency gain or loss, if any, generally will be U.S. source ordinary
income or loss.

          Section 305 of the Code provides special rules for the tax treatment
of preferred stock. According to the Treasury Regulations under that section,
the term preferred stock generally refers to stock which enjoys certain
limited rights and privileges (generally associated with specified dividend
and liquidation priorities) but does not participate in corporate growth to
any significant extent. While our preferred shares have some preferences over
our common shares, the preferred shares are not fixed as to dividend payments
or liquidation value; thus, although the matter is not entirely clear, we
believe and have taken and intend to continue to take the position, that the
preferred shares should be treated as "common stock" within the meaning of
Section 305 of the Code. If the preferred shares are treated as "common stock"
for purposes of Section 305 of the Code, distributions to U.S. Holders of
additional shares of such "common stock" or preemptive rights relating to such
"common stock" with respect to their preferred shares or preferred ADSs that
are made as part of a pro rata distribution to all shareholders in most
instances will not be subject to U.S. Federal income tax. On the other hand,
if the preferred shares are treated as "preferred stock" within the meaning of
Section 305 of the Code, and if the U.S. Holder receives a distribution of
additional shares or preemptive rights as described in the preceding sentence,
such distributions (including amounts withheld in respect of any Brazilian
taxes) will be treated as dividends that can be included in the U.S. Holders'
gross income to the same extent and in the same manner as distributions
payable in cash. In that event, the amount of such distribution (and the basis
of the new shares or preemptive rights so received) will equal the fair market
value of the shares or preemptive rights on the date of distribution.

SALE, EXCHANGE OR OTHER DISPOSITION OF PREFERRED SHARES, PREFERRED ADSS,
COMMON SHARES OR COMMON ADSS.

          A U.S. Holder will generally recognize capital gain or loss upon the
sale, exchange or other disposition of preferred shares, preferred ADSs,
common shares or common ADSs, as applicable, measured by the difference
between the U.S. dollar value of the amount received and the U.S. Holder's tax
basis (determined in U.S. dollars) in the preferred shares, preferred ADSs,
common shares or common ADSs, as applicable. If a Brazilian tax is withheld on
the sale or disposition of a share, the amount realized by a U.S. Holder will
include the gross amount of the proceeds of that sale or disposition before
deduction of the Brazilian tax. Any gain or loss will be long-term capital
gain or loss if the preferred shares, preferred ADSs, common shares or common
ADSs have been held for more than one year. Your ability to deduct capital
losses is subject to limitations. Capital gain or loss, if any, realized by a
U.S. Holder on the sale, exchange or other disposition of a



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common share, common ADS, preferred share or preferred ADS, as applicable,
generally will be treated as United States source income or loss for U.S.
foreign tax credit purposes. Consequently, in the case of a disposition of a
common share or preferred share that is subject to Brazilian tax imposed on
the gain (or, in the case of a deposit, in exchange for a common ADS or
preferred ADS of a common share or preferred share, as the case may be, that
is not registered pursuant to Resolution No. 2,689/00, on which a Brazilian
capital gains tax is imposed (see "-Brazilian Tax Considerations-Taxation of
Gains")), the U.S. Holder may not be able to benefit from the foreign tax
credit for that Brazilian tax unless it can apply (subject to applicable
limitations) the credit against U.S. tax payable on other income from foreign
sources in the appropriate income category, or, alternatively, it may take a
deduction for the Brazilian tax if such U.S. Holder elects to deduct all of
its foreign income taxes.

PASSIVE FOREIGN INVESTMENT COMPANY (PFIC) RULES

          Based upon the nature of its current and projected income, assets
and activities, we do not believe that we are, and we do not expect the
preferred shares, preferred ADSs, common shares or common ADSs to be
considered shares of, a PFIC for U.S. Federal income tax purposes. In general,
a foreign corporation is a PFIC if, for any taxable year in which the U.S.
Holder holds stock in the foreign corporation, at least 75% of such
corporation's gross income is passive income or at least 50% of the value of
such corporation's assets (determined on the basis of a quarterly average)
produce passive income or are held for the production of passive income. The
determination of whether the preferred shares, preferred ADSs, common shares
or common ADSs constitute shares of a PFIC is a factual determination made
annually and thus may be subject to change. Subject to certain exceptions,
once a U.S. Holder's preferred shares or common shares, as applicable, are
treated as shares in a PFIC, they remain shares in a PFIC. In addition,
dividends received by a U.S. Holder from a PFIC will not constitute qualified
dividend income.

          If we are treated as a PFIC, contrary to the discussion above, a
U.S. Holder would be subject to special rules with respect to (a) any gain
realized on the sale or other disposition of common shares, common ADSs,
preferred shares or preferred ADSs and (b) any "excess distribution" by us to
the U.S. Holder (generally, any distribution during a taxable year in which
distributions to the U.S. Holder on the common shares, common ADSs, preferred
shares or preferred ADSs exceed 125% of the average annual taxable
distribution the U.S. Holder received on the common shares, common ADSs,
preferred shares or preferred ADSs during the preceding three taxable years
or, if shorter, the U.S. Holder's holding period for the common shares, common
ADSs, preferred shares or preferred ADSs). Under those rules (a) the gain or
excess distribution would be allocated ratably over the U.S. Holder's holding
period for the common shares, common ADSs, preferred shares or preferred ADSs,
(b) the amount allocated to the taxable year in which the gain or excess
distribution is realized and to taxable years before the first day we became a
PFIC would be taxable as ordinary income, (c) the amount allocated to each
prior year (with certain exceptions) would be subject to tax at the highest
tax rate in effect for that year, and the interest charge generally applicable
to underpayments of tax would be imposed in respect of the tax attributable to
each such year.



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          A U.S. Holder who owns common shares, common ADSs, preferred shares
or preferred ADSs during any year we are a PFIC must file Internal Revenue
Service Form 8621. In general, if we are treated as a PFIC, the rules
described in the second paragraph of this section can be avoided by a U.S.
Holder that elects to be subject to a mark-to-market regime for stock in a
PFIC. A U.S. Holder may elect mark-to- market treatment for its common shares,
common ADSs, preferred shares or preferred ADSs, provided the common shares,
common ADSs, preferred shares or preferred ADSs, for purposes of the rules,
constitute "marketable stock" as defined in Treasury Regulations. A U.S.
Holder electing the mark-to-market regime generally would treat any gain
recognized under mark-to-market treatment or on an actual sale as ordinary
income and would be allowed an ordinary deduction for any decrease in the
value of common shares, common ADSs, preferred shares or preferred ADSs in any
taxable year and for any loss recognized on an actual sale, but only to the
extent, in each case, of previously included market-to-market income not
offset by previously deducted decreases in value. A U.S. Holder's basis in
common shares, common ADSs, preferred shares or preferred ADSs would increase
or decrease by gain or loss taken into account under the mark-to-market
regime. A market-to-market election is generally irrevocable. We do not
currently plan to provide holders with information sufficient to permit any
holder to make an election to treat the Company as a "qualified electing
fund".

DEPOSITS, WITHDRAWALS AND PRE-RELEASE

          Deposits or withdrawals of preferred shares or common shares in
exchange for preferred ADSs or common ADSs, as applicable, will not result in
the realization of any gain or loss for U.S. Federal income tax purposes. The
U.S. Treasury Department, however, has expressed concerns that parties
involved in transactions where depositary shares are pre-released may be
taking actions that are not consistent with the claiming of foreign tax
credits by the holders of the applicable ADSs. Accordingly, the analysis of
the credibility of Brazilian taxes described above could be affected by future
actions that may be taken by the U.S. Treasury Department.

TAXATION OF NON-U.S. HOLDERS

          Notes

          Payments of principal or interest are currently exempt from U.S.
Federal income tax, including withholding tax, if paid to a Non-U.S. Holder.

          A Non-U.S. Holder will not be subject to U.S. Federal income tax on
any gain realized on the redemption, sale, exchange or other dispositions of a
note, provided that such gain is not effectively connected with the Non-U.S.
Holder's conduct of a United States trade or business and, in the case of an
individual, such holder is not present in the United States for a total of 183
days or more during the taxable year in which such gain is realized and
certain other conditions are satisfied.

Preferred Shares, Preferred ADSs, Common Shares or Common ADSs.

          Non-U.S. Holders generally will not be subject to U.S. Federal
income or withholding tax on dividends received from us with respect to
preferred shares, preferred ADSs, common shares or common ADSs, unless such
income is considered effectively connected with the Non-U.S. Holder's



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conduct of a United States trade or business (and, if required by an
applicable income tax treaty, the income is attributable to a permanent
establishment or fixed base maintained in the United States).

          Non-U.S. Holders generally will not be subject to U.S. Federal
income tax on any gain realized upon the sale, exchange or other disposition
of preferred shares, preferred ADSs, common shares or common ADSs unless:

     o    such gain is considered effectively connected with the Non-U.S.
          Holder's conduct of a United States trade or business (and, if
          required by an applicable income tax treaty, the income is
          attributable to a permanent establishment or fixed base maintained
          in the United States); or

     o    such Non-U.S. Holder is an individual who is present in the United
          States for 183 days or more during the taxable year of the
          disposition and certain other conditions are met.

          In addition, any effectively connected dividends or gains realized
by a corporate Non-U.S. Holder may also, under certain circumstances, be
subject to an additional branch profits tax at a rate of 30% (or such lower
rate as may be specified by an applicable income tax treaty).

Backup Withholding and Information Reporting

          In general, payments of principal and interest on the notes,
dividends paid on, or proceeds from the sale, exchange, retirement or other
dispositions of the notes, dividends on preferred shares, preferred ADSs,
common shares or common ADSs and payments of the proceeds of a sale, exchange,
retirement or other disposition of notes, preferred shares, preferred ADSs,
common shares or common ADSs, may be subject to information reporting to the
United States Internal Revenue Service ("IRS") and, possibly, United States
backup withholding. Backup withholding will not apply, however, to a holder
who furnishes a correct taxpayer identification number or certificate of
foreign status and makes any other required certification on IRS Form W-9.
Non-U.S. Holders generally will not be subject to United States information
reporting or backup withholding. However, Non-U.S. Holders may be required to
provide certification of non-U.S. status in connection with payments received
in the United States or through certain U.S related financial intermediaries.
Amounts withheld as backup withholding may be credited against a holder's U.S.
Federal income tax liability, and a holder may obtain a refund of any excess
amounts withheld under the backup withholding rules by filing the appropriate
claim for refund with the IRS and furnishing any required information.

          THE PRECEDING DISCUSSION OF THE MATERIAL U.S. FEDERAL INCOME TAX
CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE.
ACCORDINGLY, EACH INVESTOR SHOULD CONSULT HIS, HER OR ITS OWN TAX ADVISOR AS
TO THE PARTICULAR TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING OF
NOTES, PREFERRED SHARES, PREFERRED ADSs, COMMON SHARES OR COMMON ADSs,
INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, FOREIGN OR OTHER
TAX LAWS AND OF ANY PROPOSED CHANGES IN APPLICABLE LAW.








                                     178
<PAGE>


                             DOCUMENTS ON DISPLAY

          AmBev is subject to the informational reporting requirements of the
United States Securities Exchange Act of 1934, as amended, and files with the
SEC:

     o    annual reports;

     o    certain other reports that it makes public under Brazilian law,
          files with the Brazilian stock exchanges or distributes to
          shareholders; and

     o    other information.

          You may read and copy any reports or other information that AmBev
files at the SEC's public reference rooms at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the SEC's regional offices located at the
Woolworth Building, 233 Broadway, New York, New York 10279 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Please
call the SEC at 1-800-SEC-0330 for further information on the public reference
rooms. Electronic filings made through the Electronic Data Gathering, Analysis
and Retrieval System are also publicly available through the Securities and
Exchange Commission's web site on the Internet at www.sec.gov. In addition,
material filed by AmBev may also be inspected at the offices of the New York
Stock Exchange at 20 Broad Street, New York, New York 10005.

          As a foreign private issuer, AmBev is exempt from the rules under
the Exchange Act prescribing the furnishing and content of proxy statements
and will not be required to file proxy statements with the SEC, and its
officers, directors and principal shareholders will be exempt from the
reporting and "short swing" profit recovery provisions contained in Section 16
of the Exchange Act.

          You may obtain documents from AmBev by requesting them in writing,
at the following addresses or by telephone:

          Companhia de Bebidas das Americas--AmBev
          Attention:                 Investor Relations Department
          Telephone numbers:         (55-11) 2122-1415
                                     (55-11) 2122-1414
          Fax:                       (55-11) 2122-1526
          Email:                     ir@ambev.com.br

          You may obtain additional information about AmBev on its web site at
www.ambev-ir.com. The information contained therein is not part of this annual
report.



                                     179
<PAGE>


Quantitative and Qualitative Disclosures about Market Risk

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

          We are exposed to various market risks, including changes in foreign
currency exchange rates and interest rates and changes in the prices of
certain commodities, including malt, aluminum and sugar. Market risk is the
potential loss arising from adverse changes in market rate and prices. We
enter into derivatives and other financial instruments for purposes other than
trading, in order to manage and reduce the impact of fluctuations in commodity
prices (particularly for aluminum and sugar), in foreign currency exchange
rates and in interest rates. We have established policies and procedures for
risk assessment and the approval, reporting and monitoring of derivative
financial activities. Decisions regarding hedging are made on a case-by-case
basis, taking into consideration the amount and duration of the exposure,
market volatility and economic trends.

          These instruments are accounted for based on their characteristics.
See note 2(u) to our audited consolidated financial statements for a
discussion of the accounting policies and information on derivative financial
instruments.

          We have a policy of entering into contracts only with parties that
have high credit ratings. The counterparties to these contracts are major
financial institutions, and we do not have significant exposure to any single
counterparty. We do not anticipate a credit loss from counterparty
non-performance. Our short-term investments consist mainly of fixed-term
obligations and government securities.

COMMODITY RISK

          We use a large volume of agricultural materials to produce our
products, including malt and hops for our beer and sugar, guarana, other
fruits and sweeteners for our soft drinks. See "Business-Raw Materials." We
purchase a significant portion of our malt and all of our hops outside of
Brazil. We purchase the remainder of our malt and our sugar, guarana and other
fruits and sweeteners locally. AmBev also purchases substantial quantities of
aluminum cans.

          We produce approximately 70% of our malt. The remainder and all
other commodities are purchased from third parties. We believe that adequate
supplies of the commodities we use are available at the present time, but we
cannot predict the future availability of these commodities or the prices we
will have to pay for such commodities. The commodity markets have experienced
and will continue to experience price fluctuations. We believe that the future
price and supply of agricultural materials will be determined by, among other
factors, the level of crop production, weather conditions, export demand, and
government regulations and legislation affecting agriculture, and that the
price of aluminum and sugar will be largely influenced by international market
prices. See "Business--Raw Materials."

          All of the hops we purchase in the international markets outside of
South America are paid for in U.S. dollars. In addition, although we purchase
aluminum cans and sugar in Brazil, the price is directly influenced by the
fluctuation of international commodity prices.

          As of December 31, 2003, our derivative activities consisted of
sugar futures. The table below provides information about our significant
commodity risk sensitive instruments as of December 31, 2003. The contract
terms of these instruments have been categorized by expected maturity dates.

                                       PRINCIPAL MATURITY PERIODS(1)
<TABLE>
<CAPTION>
                                                                                                       FAIR
                                   2004     2005     2006     2007     2008   THEREAFTER   TOTAL(2)  VALUE(2)
                                                       (R$ MILLION, EXCEPT PRICE PER TON)
<S>                                <C>      <C>      <C>      <C>      <C>    <C>           <C>      <C>

DERIVATIVES INSTRUMENTS
SUGAR FUTURES (BMF)
Notional Amount (ton)              931
Average Price (R$/ton)          391.88                                                                 0.00
SUGAR FUTURES (LIFFE)



                                     180
<PAGE>



Notional Amount (ton)           22,100
Average Price (R$/ton)          530.54                                                               -(0.08)
Sugar Futures (NYBOT)
Notional Amount (ton)           28.143
Average Price (R$/ton)          370.90                                                               -(0.76)

</TABLE>

----------------------

(1)  Negative notional amounts represent an excess of liabilities over assets
     at any given moment.
(2)  For cash and debt instruments, total represents the carrying value of
     those instruments within the balance sheet and is therefore directly
     comparable with the fair value of the instrument, included within the
     fair value column. For derivative instruments, total represents the total
     value of derivative instrument contracts (notional value) within the
     forward, future and swap portfolio, and not a balance sheet value. The
     unrealized gain or loss on the instrument at the balance sheet date is
     included within the financial statements at fair value and is therefore
     represented under the fair value column.

FOREIGN EXCHANGE RISK

          We are exposed to fluctuations in foreign exchange rate movements
because substantially all of our revenues are in reais, while a significant
portion of our debt is denominated in or indexed to foreign currencies,
particularly the U.S. dollar and the Japanese Yen. In addition, a significant
portion of our operating expenses, in particular those related to hops, malt
and aluminum, are also denominated in or linked to the U.S. dollar. We enter
into derivative financial instruments to manage and reduce the impact of
changes in foreign currency exchange rates in respect of our U.S.
dollar-denominated and Yen-denominated or indexed debt. From January 1, 1999
until December 31, 2003, the Brazilian real depreciated by 58.2% against the
U.S. dollar, and, as of December 31, 2003, the commercial market rate for
purchasing U.S. dollars was R$2.89 per U.S.$1.00. The U.S. dollar depreciated
against the Brazilian real by 18.2% during 2003.

          As of December 31, 2003, derivative activities consisted of foreign
currency forward contracts, foreign currency swaps and future contracts. The
table below provides information about our significant foreign exchange rate
risk sensitive instruments as of December 31, 2003. The contract terms of
these instruments have been categorized by expected maturity dates.



                                     181
<PAGE>



<TABLE>
<CAPTION>
                                                          PRINCIPAL MATURITY PERIODS(1)
                                                          -----------------------------
                                                                                                                FAIR
                                  2004       2005      2006        2007      2008    THEREAFTER    TOTAL(2)    VALUE(2)
                                  ----       ----      ----        ----      ----    ----------    -------     --------
                                                      (R$ IN MILLIONS, EXCEPT PERCENTAGES)
<S>                                   <C>        <C>        <C>        <C>        <C>        <C>        <C>         <C>

DEBT INSTRUMENTS
SYNDICATED LOAN (YEN)
Notional Amount                 (1,062.96)                                                         (1,062.96)  (1,062.96)
Average Pay Rate                     2.37%
U.S. DOLLAR DEBT
DENOMINATED (FIXED RATE)
Notional Amount                    (173.0)     (26.2)     (19.9)     (20.1)     (18.1)  (2,890.1)   (3,157.3)   (3,157.3)
Average Pay Rate                     9.42%      9.42%      9.42%      9.42%      9.42%      9.42%
BNDES CURRENCY BASKET
DEBT (FIXED RATE)
U.S. Dollar Debt
INTERNATIONAL DEBT
U.S. Dollar Debt
Denominated (Fixed Rate)           (244.1)     (73.5)     (82.4)     (76.8)     (87.7)      (54.6)     (618.9)
Average Pay Rate                     5.90%      5.47%      2.69%      4.25%     10.59%     11.74%
INTERNATIONAL DEBT
U.S. Dollar Debt
Denominated (Floating Rate)                                (5.8)                                        (5.8)       (5.8)
LIBOR                                                      3.44%
INTERNATIONAL DEBT
Other Latin American
Currency (Fixed Rate)              (234.1)                                                            (234.1)     (234.1)
Average Pay Rate                     7.86%
CASH INSTRUMENTS
CASH AND CASH EQUIVALENT
DENOMINATED IN U.S. DOLLAR
Notional Amount                     181.9                                                              181.9       181.9
Average Interest Rate                1.12%
U.S. SHORT-TERM INVESTMENTS
DENOMINATED IN U.S. DOLLAR
Notional Amount                      42.7                                                               42.7        42.7
Average Interest Rate                1.12%
BRAZILIAN REAL SHORT-TERM
INVESTMENTS DENOMINATED
IN U.S. DOLLAR
Notional Amount                     131.6                                                              131.6       131.6
Average Interest Rate                2.15%
BRAZILIAN REAL LONG-TERM
INVESTMENTS DENOMINATED
IN U.S. DOLLAR
Notional Amount                     342.2                                                              342.2       342.2
Average Interest Rate                 8.1%
INTERNATIONAL CASH AND CASH
EQUIVALENT DENOMINATED
IN OTHER LATIN AMERICAN
CURRENCY
Notional Amount                     295.0                                                              295.0       295.0

</TABLE>



                                     182
<PAGE>



<TABLE>
<CAPTION>
<S>                                   <C>        <C>        <C>        <C>        <C>        <C>         <C>         <C>

DERIVATIVES INSTRUMENTS
BM&F DDI and Dollar Future
Notional Amount                   1,280.8      200.1      124.4   125.5    0.5                       1,731,2        23.1
Average Interest Rate                10.8%       2.9%      5.2%     5.6%    6.7%
U.S.$ X R$ CROSS CURRENCY
INTEREST RATE SWAP
Notional Amount                     605.7                                 1,089.4                    1,695.1        94.0
Average Interest Rate                 2.4%                                   6.7%
YEN X U.S.$ CROSS CURRENCY
INTEREST RATE SWAP
Notional Amount                     917.9                                                              917.9       142.3
Average Interest Rate
NDF ARGENTINE PESO ARS
X U.S.$
Notional Amount                     152.4                                                              152.4      (-5.43)
Average Interest Rate                2.98                                                               2.98

</TABLE>

----------------------

(1) Negative notional amounts represent an excess of liabilities over assets at
    any given moment.
(2) For cash and debt instruments, total represents the carrying value of those
    instruments within the balance sheet and is therefore directly comparable
    with the fair value of the instrument, included within the fair value
    column. For derivative instruments, total represents the total value of
    derivative instrument contracts (notional value) within the forward, future
    and swap portfolio, and not a balance sheet value. The unrealized gain or
    loss on the instrument at the balance sheet date is included within our
    financial statements at fair value and is therefore represented under the
    fair value column.

                                       PRINCIPAL MATURITY PERIODS(1)
<TABLE>
<CAPTION>
                                                                                                       FAIR
                                   2004     2005     2006     2007     2008   THEREAFTER   TOTAL(2)  VALUE(2)
                                                       (R$ MILLION, EXCEPT PRICE PER TON)
<S>                                <C>      <C>      <C>      <C>      <C>    <C>           <C>      <C>

INTEREST RATE SWAP LIBOR 3 MONTHS
X FIXED NOTIONAL AMOUNT            905.0                                                    905.0      (4.8)
AVERAGE INTEREST RATE              4.67%
INTEREST RATE SWAP LIBOR                                                                    127.2      (0.3)
6 MONTHS X FIXED
NOTIONAL AMOUNT                     66.6    60.6
AVERAGE INTEREST RATE               4.71%  4.71%
</TABLE>

Our foreign  currency  exposure gives rise to market risks  associated  with
exchange rate  movements,  mainly against the U.S.  dollar.  Foreign currency-
denominated liabilities at December 31, 2003 included debt of R$3,802.4 million.

INTEREST RATE RISK

          We use interest rate swap agreements to manage interest risks
associated with changing rates. The differential to be paid or received is
accrued as interest rates change and is recognized in interest income or
expense, respectively, over the life of the particular contracts. We are
exposed to interest rate volatility with respect to our cash and cash
equivalents, short-term investments and fixed and floating rate debt. Our U.S.
dollar-denominated cash equivalents generally bear interest at a floating
rate.

          We are exposed to interest rate volatility with regard to existing
issuances of fixed rate debt, existing issuances of variable rate debt,
currency future and forward swaps agreements, cash and cash equivalents and
short-term investments. We manage our debt portfolio in response to changes in
interest rates and foreign currency rates by periodically retiring, redeeming
and repurchasing debt and using derivative financial instruments.

          The table below provides information about our significant interest
rate sensitive instruments. For variable interest rate debt, the rate
presented is the weighted average rate calculated as of December 31, 2003. The
contract terms of these instruments have been categorized by expected maturity
dates.



                                     183
<PAGE>



Instruments with Interest Rate Risk
-----------------------------------

<TABLE>
<CAPTION>
                                                          PRINCIPAL MATURITY PERIODS(1)
                                                          -----------------------------
                                                                                                                FAIR
                                  2004       2005      2006        2007      2008    THEREAFTER    TOTAL(2)    VALUE(2)
                                  ----       ----      ----        ----      ----    ----------    -------     --------
                                                      (R$ IN MILLIONS, EXCEPT PERCENTAGES)
<S>                                   <C>        <C>        <C>        <C>        <C>        <C>         <C>         <C>

DEBT INSTRUMENTS
SYNDICATED LOAN (YEN)
Notional Amount                 (1,062.96)                                                         (1,062.96)     (938.7)
Average Pay Rate                     2.37%
U.S. DOLLAR DEBT
DENOMINATED (FIXED RATE)
Notional Amount                    (152.8)     (16.2)                                  (2,889.2)   (3,058.3)    (3,384.4)
Average Pay Rate                     9.42%      9.42%                                     9.42%
INTERNATIONAL DEBT
U.S. Dollar Debt
Denominated (Fixed Rate)           (244.1)     (73.5)     (82.4)     (76.8)     (87.7)     (54.6)     (618.9)     (618.9)
Average Pay Rate                     5.90%      5.47%      2.69%      4.25%     10.59%     11.74%
INTERNATIONAL DEBT
U.S. Dollar Debt
Denominated (Floating Rate)                                (5.8)                                        (5.8)       (5.8)
LIBOR                                                      3.44%
INTERNATIONAL DEBT
Other Latin American Currency
Denominated (Fixed Rate)           (234.1)                                                            (234.1)     (234.1)
Average Pay Rate                     7.86%
REAIS DEBT DENOMINATED
(FLOATING RATE--TJLP)
Notional Amount                    (227.3)    (123.0)     (69.3)     (55.9)     (44.2)      (6.5)     (526.3)     (526.3)
TJLP + Average Pay Rate              3.19%      3.19%      3.19%      3.19%      3.19%      3.19%
REAIS DEBT--ICMS (FIXED RATE)
Notional Amount                     (34.6)               (213.5)                          (127.1)     (375.1)     (375.1)
Average Pay Rate                     4.93%                4.93%                             4.93%
CASH INSTRUMENTS
CASH AND CASH EQUIVALENT
DENOMINATED IN U.S. DOLLAR
Notional Amount                     181.9                                                              181.9       181.9
Average Interest Rate                1.12%
U.S. SHORT-TERM INVESTMENTS
DENOMINATED IN U.S. DOLLAR
Notional Amount                      42.7                                                               42.7        42.7
Average Interest Rate                1.12%
BRAZILIAN REAIS SHORT-TERM
INVESTMENTS DENOMINATED IN
U.S. DOLLAR
Notional Amount                     131.6                                                              131.6       131.6
Average Interest Rate                2.15%
BRAZILIAN REAIS LONG-TERM
INVESTMENTS DENOMINATED IN
U.S. DOLLAR
</TABLE>



                                     184
<PAGE>



<TABLE>
<CAPTION>
<S>                                   <C>        <C>        <C>        <C>        <C>        <C>         <C>        <C>

National Amount                     342.2                                                              342.2       342.2
Average Interest Rate                 8.1%
BRAZILIAN SHORT-TERM INVESTMENTS
DENOMINATED IN REAIS
Notional Amount                   1,876.5                                                            1,876.5     1,876.5
Average Interest Rate               16.27%
INTERNATIONAL CASH AND CASH
EQUIVALENT DENOMINATED IN
LATIN CURRENCY
Notional Amount                     295.0                                                              295.0       295.0
DERIVATIVES INSTRUMENTS
BM&F DDI and Dollar Future
Notional Amount                   1,343.7      200.1      124.4      125.5        0.5                1,794.2        21.2
Average Interest Rate                10.8%       2.9%       5.2%       5.6%       6.7%
U.S.$ X R$ CROSS CURRENCY
INTEREST RATE SWAP
Notional Amount                     604.9                                     1,089.4                1,696.6        94.0
Average Interest Rate                 2.4%                                        6.7%
YEN X U.S.$ CROSS CURRENCY
INTEREST RATE SWAP
Notional Amount                     909.7                                                              909.7       142.3
Average Interest Rate
INTEREST RATE SWAP LIBOR
3 MONTHS X FIXED
Notional Amount                     905.0                                                              905.0        (4.8)
Average Interest Rate                4.67%
INTEREST RATE SWAP LIBOR
6 MONTHS X FIXED
Notional Amount                      66.6       60.6                                                   127.2        (0.3)
Average Interest Rate                4.71%      4.71%
</TABLE>


----------------------

(1) Negative notional amounts represent an excess of liabilities over assets on
    any given moment.

(2) For cash and debt instruments, total represents the carrying value of
    those instruments within the balance sheet, and is therefore directly
    comparable with the fair value of the instrument  included within the fair
    value column. For derivative instruments, the total represents the total
    value of derivative instrument contracts (notional value) within the
    forward, future and swap portfolio, and not a balance sheet value.  The
    unrealized gain or loss on the instrument at the balance sheet date is
    included within our financial statements at Fair Value, and is therefore
    represented under the Fair Value column.

          Most of the floating rate debt accrues interest at TJLP (Taxa de
Juros de Longo Prazo) plus a spread. The TJLP is a long-term nominal interest
rate fixed by the Brazilian government on a quarterly basis. During the period
set forth below the TJLP was:

                                   2004      2003      2002     2001      2000
                                   ----      ----      ----     ----      ----
1st Quarter                       10.00     11.00     10.00     9.25     12.00
2nd Quarter                        9.75     12.00      9.50     9.25     11.00
3rd Quarter                                 12.00     10.00     9.50     10.25
4th Quarter                                 11.00     10.00    10.00      9.75

          We have not experienced, and do not expect to experience, difficulty
obtaining financing or refinancing existing debt.



                                     185
<PAGE>

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

         Not applicable.

                                    PART II



DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

          Not applicable.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

          Not applicable.

DISCLOSURE CONTROLS AND PROCEDURES

          The Company has carried out an evaluation under the supervision and
with the participation of the Company's management, including the Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures.
There are inherent limitations to the effectiveness of any system of
disclosure controls and procedures, including the possibility of human error
and the circumvention or overriding of the controls and procedures.
Accordingly, even effective disclosure controls and procedures can only
provide reasonable assurance of achieving their control objectives. Based upon
and as of the date of the Company's evaluation, the Chief Executive Officer
and Chief Financial Officer of the Company concluded that the disclosure
controls and procedures are effective to provide reasonable assurance that
information required to be disclosed in the reports the Company files and
submits under the Exchange Act is recorded, processed, summarized and reported
as and when required.

          There has been no change in the Company's internal control over
financial reporting during the Company's fiscal year ended December 31, 2003
that has materially affected or is reasonably likely to materially affect the
Company's internal control over financial reporting.

AUDIT COMMITTEE FINANCIAL EXPERT

          As of yet, we have not appointed an "audit committee financial
expert", as defined by the SEC. As disclosed below, we are in the process of
implementing a fully independent audit committee as a best corporate
governance practice, and presently, our current audit committee does not
follow the independence requirements of such rule as we are still exempt from
the independence requirements until July 2005 according to Exchange Act Rule
10A-3(a)(5)(A).

CODE OF ETHICS

          We have adopted a code of ethics (as defined under the rules and
regulations of the SEC) that applies to our principal executive officer,
principal financial officer and principal accounting officer, among others.
The code of ethics became effective in 2003 and is attached to this annual
report as an Exhibit. If the provisions of the code of ethics that applies to
our principal executive officer, principal financial officer or principal
accounting officer are amended, or if a waiver therefrom is granted, we will
disclose such amendment or waiver.


                                     186

<PAGE>



PRINCIPAL ACCOUNTANT FEES AND SERVICES

          PricewaterhouseCoopers Auditores Independentes, acted as our
independent auditor for the fiscal years ended December 31, 2003 and 2002. The
chart below sets forth the total amount billed to us by PricewaterhouseCoopers
Auditores Independentes for services performed in the years 2003 and 2002, and
breaks down these amounts by category of service:

<TABLE>
<CAPTION>
                                                                2003                   2002
                                                              ---------             ---------
                                                                 R$                     R$
<S>                                                           <C>                   <C>
Audit Fees............................................        1,398,395              889,702
Audit-related Fees....................................          875,864              901,742
Tax Fees..............................................          419,048               84,825
All Other Fees........................................          544,974             1,654,222
                                                              ---------             ---------
Total.................................................        3,238,281             3,530,491
                                                              =========             =========
</TABLE>

AUDIT FEES

          Audit fees are fees billed for the audit of our annual financial
statements and for the reviews of our quarterly financial statements in
connection with statutory and regulatory filings or engagements.

Audit-Related Fees

          Audit-related Fees in 2003 and 2002 consist of fees billed for
assurance and related services that are reasonably related to the performance
of the audit or review of the company's financial statements or that are
traditionally performed by the external auditor, and include consultations
concerning financial and tax accounting, and reporting standards; internal
control reviews; review of security controls and operational effectiveness of
systems; and employee benefit plan audits.

TAX FEES

          Tax fees in 2003 and 2002 were related to services for tax
compliance, tax planning and tax advice.

ALL OTHER FEES

          All other services include for 2002 and for 2003 other risk
management advice and analysis or review of business plans or planning
processes (but not design or implementation thereof).

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

          The audited financial statements herein have been audited by
PricewaterhouseCoopers Auditores Independentes, Sao Paulo, Brazil, independent
registered public accounting firm. Their offices are located at Avenida
Francisco Matarazzo, 1400, 05001-901 Sao Paulo, SP, Brazil. They are members
of the Conselho Regional de Contabilidade (Regional Board of Accountants of
Sao Paulo) and their registration number is CRC.2.SP.000160/O-5.

Pursuant to the audit firm rotation rules introduced by Article 31 of CVM
Instruction No. 308/99, we were required to replace our auditors,
PricewaterhouseCoopers Auditores Independentes, for purposes of auditing the
financial statements to be filed with the CVM for the year ending December 31,
2004. We have selected Deloitte Touche & Tohmatsu Auditores Independentes, to
perform the audit of the financial statements for the year ending December 31,
2004. The offices


                                     187

<PAGE>


of Deloitte Touche & Tohmatsu Auditores Independentes are located at Rua
Alexandre Dumas, 1981, 04717-906 Sao Paulo, SP, Brazil. They are members of
the Conselho Regional de Contabilidade (Regional Board of Accountants of Sao
Paulo) and their registration number is CRC.2.SP.011609/O-8.

PRE-APPROVAL POLICIES AND PROCEDURES

          The audit committee approves all audit, audit-related, tax and other
services provided by PricewaterhouseCoopers Auditores Independentes. Any
services provided by PricewaterhouseCoopers Auditores Independentes that are
not specifically included within the scope of the audit must be pre -approved
by the audit committee prior to any engagement. The audit committee is
permitted to approve certain fees for audit-related services, tax services and
other services pursuant to a de minimis exception before the completion of the
engagement. In 2003, none of the fees paid to PricewaterhouseCoopers Auditores
Independentes were approved pursuant to the de minimis exception.

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

          On June 13, 2000, our board of directors approved the creation of an
audit committee (comite de auditoria), whose responsibilities are consistent
with the U.S. Blue Ribbon Committee and the rules and regulations of the New
York Stock Exchange. The primary responsibility of the audit committee, which
is not independent of our management and of our independent auditors, is to
review our financial statements and report on them to our shareholders.

          Although we are in the process of implementing a fully independent
audit committee, presently our current audit committee does not follow the
independence requirements of such rule as we are still exempt from the
independence requirements until July 2005 according to Exchange Act Rule 10A-3
(a)(5)(A).

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

          Not required for the year ended December 31, 2003.


                                     188

<PAGE>


EXHIBITS AND CERTIFICATIONS

          1.1  By-laws of Companhia de Bebidas das Americas-AmBev
               (English-language translation).

          1.2  Minutes of the Extraordinary Shareholders' Meeting held on May
               18, 2004 (filed with the Securities and Exchange Commission on
               Form 6-K of AmBev on May 20, 2004).

          1.3  By-laws of Companhia Brasileira de Bebidas (CBB)
               (English-language translation) (incorporated by reference to
               Exhibit 3.2 to Form F-4 filed by AmBev on August 29, 2002).

          2.1  Indenture dated September 18, 2003 between CBB and The Bank of
               New York as Trustee.

          2.2  Form of Note (contained in Exhibit 2.1).

          2.3  Guaranty dated September 18, 2003 between AmBev and The Bank of
               New York.

          2.4  Insurance Policy for Expropriation and Currency
               Inconvertibility dated December 19, 2001 between Steadfast
               Insurance Company and The Bank of New York.

          2.5  Agreement Regarding the Insurance Policy for Expropriation and
               Currency Inconvertibility by the Trustee, AmBev, CBB and the
               Insurer, dated September 18, 2003.

          2.6  Application for Political Risk Insurance for Capital Markets
               Transactions, executed by the Trustee

          3.1  Amendment to the Shareholders' Agreement of Companhia de
               Bebidas das Americas-AmBev dated as of March 2, 2004 among
               FAHZ, Braco, Ecap, AmBev, Jorge Paulo Lemann, Marcel Herrmann
               Telles, and Carlos Alberto da Veiga Sicupira (English-language
               translation) (incorporated by reference to Exhibit 2.16 to
               Amendment No. 9 to Schedule 13D relating to Quinsa, filed by
               AmBev on March 9, 2004).

          3.2  Incorporacao Agreement dated March 3, 2004 (incorporated by
               reference to Exhibit 2.13 to Amendment No. 9 to Schedule 13D
               relating to Quinsa, filed by AmBev on March 9, 2004).

          3.3  Shareholders' Voting Rights Agreement of S-Braco Participacoes
               S.A. dated as of August 30, 2002 among Santa Judith, Santa
               Irene, Santa Estela. and Santa Prudencia Participacoes S.A.,
               with Jorge Paulo Lemann, Carlos Alberto da Veiga Sicupira and
               Marcel Herrmann Telles as intervening parties, and S-Braco,
               Braco, Ecap and AmBev as acknowledging parties
               (English-language translation) (incorporated by reference to
               Exhibit C to Amendment No. 2 to Schedule 13D relating to AmBev,
               filed by FAHZ, Braco and Ecap on November 29, 2002).


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          3.4  AmBev Share Transfer Agreement dated as of January 31, 2003,
               among BAC, Braco, Ecap, FAHZ and AmBev (incorporated by
               reference to Exhibit 2.7 to Amendment No. 1 to Schedule 13D
               relating to Quinsa, filed by AmBev on February 4, 2003).

          3.5  AmBev Governance Agreement dated as of January 31, 2003, among
               BAC, Braco, Ecap, FAHZ and AmBev (incorporated by reference to
               Exhibit 2.8 to Amendment No. 1 to Schedule 13D relating to
               Quinsa, filed by AmBev on February 4, 2003).

          4.1  Purchase Agreement dated as of September 11, 2003, among
               Companhia de Bebidas das Americas-AmBev and Citigroup Global
               Markets Inc.

          4.2  Registration Rights Agreement dated as of September 18, 2003
               among CBB and Companhia de Bebidas das Americas-AmBev as
               Guarantor and Citigroup Global Markets.

          4.3  Performance Agreement between AmBev and the Conselho
               Administrativo de Defesa Economica (CADE), dated April 19, 2000
               (incorporated by reference to Exhibit 10.8 to the Form F-4
               filed by AmBev on August 29, 2000).

          4.4  Share Exchange Agreement dated as of May 1, 2002, between AmBev
               and Quinsa (incorporated by reference to Exhibit 2.1 to
               Schedule 13D relating to Quinsa, filed by AmBev on May 13,
               2002).

          4.5  Stock Purchase Agreement dated as of May 1, 2002, between BAC
               and AmBev (incorporated by reference to Exhibit 2.2 to Schedule
               13D relating to Quinsa, filed by AmBev on May 13, 2002).

          4.6  Amendment No. 1 to Stock Purchase Agreement dated as of January
               31, 2003, between BAC and AmBev (incorporated by reference to
               Exhibit 2.3 to Amendment No. 1 to Schedule 13D relating to
               Quinsa, filed by AmBev on February 4, 2003).

          4.7  Letter Agreement dated January 13, 2003, between AmBev, BAC and
               Quinsa (incorporated by reference to Exhibit 2.4 to Amendment
               No. 1 to Schedule 13D relating to Quinsa, filed by AmBev on
               February 4, 2003).

          4.8  Quinsa Shareholders' Agreement dated as of January 31, 2003,
               among Quinsa, AmBev and BAC (incorporated by reference to
               Exhibit 2.5 to Amendment No. 1 to Schedule 13D relating to
               Quinsa, filed by AmBev on February 4, 2003).

          4.9  Registration Rights Agreement dated as of January 31, 2003,
               among BAC and AmBev (incorporated by reference to Exhibit 2.6
               to Amendment No. 1 to Schedule 13D relating to Quinsa, filed by
               AmBev on February 4, 2003).

          4.10 Share Pledge Agreement dated as of January 31, 2003, among BAC,
               AmBev and Quinsa (incorporated by reference to Exhibit 2.9 to
               Amendment No. 1 to Schedule 13D relating to Quinsa, filed by
               AmBev on February 4, 2003).


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          4.11 Escrow Agreement dated as of January 31, 2003, among BAC, AmBev
               and The Bank of New York (incorporated by reference to Exhibit
               2.10 to Amendment No. 1 to Schedule 13D relating to Quinsa,
               filed by AmBev on February 4, 2003).

          4.12 Resolution of the Office of Competition, Deregulation and
               Consumer Advocacy of the Ministry of Production of the Republic
               of Argentina regarding the business combination of AmBev and
               Quinsa dated January 13, 2003 (English-language translation)
               (incorporated by reference to Exhibit 2.11 to Amendment No. 1
               to Schedule 13D relating to Quinsa, filed by AmBev on February
               4, 2003).

          4.13 License Agreement dated as of January 31, 2003, between AmBev
               and Quinsa (filed with the Securities and Exchange Commission
               with the original 2002 annual report on Form 20-F of AmBev on
               June 30, 2003).

          4.14 Distribution Agreement dated as of January 31, 2003, between
               AmBev and Quinsa (filed with the Securities and Exchange
               Commission with the original 2002 annual report on Form 20-F of
               AmBev on June 30, 2003).

          8.1  List of Material Subsidiaries of Companhia de Bebidas das
               Americas-AmBev.

          11.1 Code of Ethics (English-language version).

          12.1 Principal Executive Officer Certification pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002.

          12.2 Principal Financial Officer Certification pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002.

          13.1 Principal Executive Officer Certification pursuant to Section
               906 of the Sarbanes-Oxley Act of 2002.

          13.2 Principal Financial Officer Certification pursuant to Section
               906 of the Sarbanes-Oxley Act of 2002


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                                  SIGNATURES



Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant, Companhia de Bebidas das Americas-AmBev, certifies that
it meets all of the requirements for filing on Form 20-F and that it has duly
caused and authorized the undersigned to sign this annual report on Form 20-F
on its behalf.

                                     Companhia de Bebidas das Americas-AmBev

                                     By:
                                        ------------------------------------
                                        Name: Carlos Alves de Brito
                                        Title: Chief Executive Officer

                                     By:
                                        ------------------------------------
                                        Name: Luis Felipe Pedreira Dutra Leite
                                        Title: Chief Financial Officer

Date: June 27, 2004


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